Sapsora Company uses ROI to measure the performance of its operating divisions and to reward division managers.
Fantastic news! We've Found the answer you've been seeking!
Question:
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. Compute the EVA for Division A and Division B.
Division A | Division B | ||||||
Total assets | $ | 6,140,000 | $ | 8,610,000 | |||
Current liabilities | $ | 600,000 | $ | 1,800,000 | |||
After-tax operating income | $ | 1,040,000 | $ | 1,167,000 | |||
ROI | 24 | % | 13 | % | |||
Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078025778
17th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
Posted Date: