A company has two divisions, Small and Big. Big Division has net assets of H8 million,...

 

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A company has two divisions, Small and Big. Big Division has net assets of H8 million, and makes an annual profit of 900,000. Small Division has net assets of $400,000 and makes an annual profit of 90,000. The cost of capital for both divisions is 10% and 80% of profits are controllable. Required: Compare the performance of the two divisions using: a) ROI b) Residual income c) Comment on your results d) Explain the levels of autonomy/authority in divisionalized organisations e) State the advantages of divisionalization A company has two divisions, Small and Big. Big Division has net assets of H8 million, and makes an annual profit of 900,000. Small Division has net assets of $400,000 and makes an annual profit of 90,000. The cost of capital for both divisions is 10% and 80% of profits are controllable. Required: Compare the performance of the two divisions using: a) ROI b) Residual income c) Comment on your results d) Explain the levels of autonomy/authority in divisionalized organisations e) State the advantages of divisionalization

Answer rating: 100% (QA)

Solution alculating Cast of Division Net assels Annud propte Capital Big Division 8000000 900000 10 ... View the full answer