The Clarity Division of Mega Glass PLC has an investment of £1,500,000 and currently generates a net profit of £112,500 per year. Clarity has proposed an additional investment of £1,000,000 which is expected to return an annual profit of £90,000. Mega Glass is concerned that Clarity is not recovering the group’s cost of capital of 8%. Use ROI and RI techniques to advise Mega Glass.
Answer to relevant QuestionsExplain the idea of value-based management and how shareholder value relates to the interaction between product and capital markets. Thomas Investments has an operating profit for the year of £185,000. An examination of the Income Statement and Balance Sheet shows that depreciation was £65,000 taxation was £40,000 new capital investment was £100,000 ...What would be the effect of these two alternatives on Quicker’s reported profits and what might be the likely motivational effects? What suggestions would you make? a. Produce a budget that shows the contribution for each of the three services. Rank the three services as to the greatest contributions to profitability. What are the constraints? b. The marketing manager has asked your ...What does the report tell the reader? What is its limitation? Construct a flexible budget and determine the variances. How does that provide more information to users?
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