Heather Smith Cosmetics (HSC) manufactures a variety of products and is organized into three divisions (investment centers):

Question:

Heather Smith Cosmetics (HSC) manufactures a variety of products and is organized into three divisions (investment centers): soap products, skin lotions, and hair products. Information about the most recent year's operations follows. The information includes the value of intangible assets, including research and development, patents, and other innovations that are not included on HSC's balance sheet. Were these intangibles to be included in the financial statements (as they are for EVAÂ®), the increase in the balance sheet and the increase in after-tax operating income would be as given below.

Required
1. Calculate the return on investment (ROI) for each division.
2. Calculate the residual income (RI) for each division.
3. Calculate EVA^® for each division and comment on your answers for ROI, RI, and EVA^®.

Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented... Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...