Sapsora Company uses ROI to measure the performance of its
operating divisions and to reward division...
Sapsora Company uses ROI to measure the performance of its
operating divisions and to reward division managers. A summary of
the annual reports from two divisions is shown as follows. The
company’s weighted-average cost of capital is 10 percent.
Division
A
Division
B
Total assets
$
6,080,000
$
8,670,000
Current liabilities
$
550,000
$
1,750,000
After-tax operating income
$
1,020,000
$
1,159,000
ROI
24
%
12
%
a. Which division is more profitable in
absolute dollars?
b. Compute the EVA...
Sapsora Company uses ROI to measure the performance of its
operating divisions and to reward division...
Sapsora Company uses ROI to measure the performance of its
operating divisions and to reward division managers. A summary of
the annual reports from two divisions is shown as follows. The
company’s weighted-average cost of capital is 12 percent.
Division A
Division B
Total assets
$
6,000,000
$
8,750,000
Current liabilities
$
500,000
$
1,750,000
After-tax operating income
$
1,000,000
$
1,180,000
ROI
25
%
14
%
a. Which division is more profitable in
absolute dollars?
b. Compute the EVA...
ROI and EVA
The Bella Vista Woodwork Company uses return on investment and
economic value added...
ROI and EVA
The Bella Vista Woodwork Company uses return on investment and
economic value added as performance evaluation measures for its
division managers. The company's weighted average cost of capital
is 10 percent. Assume a tax rate of 20 percent. Financial data for
the company's three divisions follow. (all currencies converted to
US $)
US Division Asia Division Europe Division
Sales $300,000 $375,000 $450,000
Operating Income 25,000 28,000 29,500
Average operating Assets 150,000 125,000 175,000
Average Current liabilities 10,000...
ROI and Residual Income:Basic Computations
Watkins Associated Industries is a highly diversified company
with three divisions:...
ROI and Residual Income:Basic Computations
Watkins Associated Industries is a highly diversified company
with three divisions: Trucking, Seafood, and Construction. Assume
that the company uses return on investment and residual income as
two of the evaluation tools for division managers. The company has
a minimum desired rate of return on investment of 10 percent with a
30 percent tax rate. Selected operating data for three divisions of
the company follow.
Trucking Division
Seafood Division
Construction Division
Sales
$1,000,000
$690,000
$900,000...
ROI and Residual Income:Basic Computations
Watkins Associated Industries is a highly diversified company with
three divisions:...
ROI and Residual Income:Basic Computations
Watkins Associated Industries is a highly diversified company with
three divisions: Trucking, Seafood, and Construction. Assume that
the company uses return on investment and residual income as two of
the evaluation tools for division managers. The company has a
minimum desired rate of return on investment of 10 percent with a
30 percent tax rate. Selected operating data for three divisions of
the company follow.
Trucking Division
Seafood Division
Construction Division
Sales
$1,000,000
$690,000
$900,000...
ROI and Residual Income:Basic Computations
Watkins Associated Industries is a highly diversified company with
three divisions:...
ROI and Residual Income:Basic Computations
Watkins Associated Industries is a highly diversified company with
three divisions: Trucking, Seafood, and Construction. Assume that
the company uses return on investment and residual income as two of
the evaluation tools for division managers. The company has a
minimum desired rate of return on investment of 10 percent with a
30 percent tax rate. Selected operating data for three divisions of
the company follow.
Trucking Division
Seafood Division
Construction Division
Sales
$1,200,000
$780,000
$900,000...
Evaluating Investment Centers
Terry Enterprises, Inc. has two divisions—the Foods division and
the Clothes division. Historically,...
Evaluating Investment Centers
Terry Enterprises, Inc. has two divisions—the Foods division and
the Clothes division. Historically, Terry has used the division's
ROI as the performance measure for the bonus determinations. Terry
Foods division has gross total assets of $1,000,000, accumulated
depreciation of $350,000, current liabilities of $250,000, and
sales of $2,000,000. Foods' operating income is $240,000. Terry
Clothes division has gross total assets of $5,000,000, accumulated
depreciation of $2,100,000, current liabilities of $1,500,000, and
sales of $8,000,000. Clothes' operating income...
Vaughan Company has 3 divisions with the following
information:
Division
A
Division
B
Division
C
Sales...
Vaughan Company has 3 divisions with the following
information:
Division
A
Division
B
Division
C
Sales
$750,000
$700,000
$360,000
Net
Operating Income
$30,000
$35,000
$36,000
Average
Operating Assets
$200,000
$500,000
$300,000
Minimum
Required Rate of Return
8%
15%
9%
Assume that each division was presented with an investment
opportunity that would yield a rate of return of 11%. If
performance is being measured by residual income a.both
division A and C would invest in the project, b.only division B
will...
Corbel Corporation has two divisions: Division A and Division B.
Last month, the company reported a...
Corbel Corporation has two divisions: Division A and Division B.
Last month, the company reported a contribution margin of $43,100
for Division A. Division B had a contribution margin ratio of 35%
and its sales were $285,000. Net operating income for the company
was $31,600 and traceable fixed expenses were $55,200. Corbel
Corporation's common fixed expenses were:
Corbel Corporation has two divisions: Division A and Division B.
Last month, the company reported a...
Corbel Corporation has two divisions: Division A and Division B.
Last month, the company reported a contribution margin of $47,700
for Division A. Division B had a contribution margin ratio of 35%
and its sales were $231,000. Net operating income for the company
was $27,200 and traceable fixed expenses were $59,700. Corbel
Corporation's common fixed expenses were:
A) 128, 550
B)59,700
C)101,350
D)41,650