The method used to evaluate the performance of the divisions should be re-evaluated. The present method identifies the amount of income from opera-tions per dollar of earned revenue. However, this company requires a signifi-cant investment in fixed assets, for research, development, production, and distribution facilities. In addition, the amount of assets may not be related to the revenue earned. For example, some divisions are able to concentrate as-sets in a densely populated regional area and service a large population over those assets (e.g., Metro Division). Other regions, however, have widely dis-tributed assets over sparsely populated areas that use less services over those assets. The present measure fails to incorporate these differences in asset utilization into the measure. Naturally, the amount of assets used by a division in earning a return is a very important consideration in evaluating di-visional performance. Therefore, a better divisional performance measure would be either (a) rate of return on investment (income from operations di-vided by divisional assets) or (b) residual income (income from operations less a minimal return on divisional assets). Both measures incorporate the assets used by the divisions.