Cora Manufacturing makes fashion products and has two divisions: clothing and cosmetics. The company's results for...
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Cora Manufacturing makes fashion products and has two divisions: clothing and cosmetics. The company's results for the past year are as follows: Operating Income Current Liabilities $1,750,000 $2,500,000 2,400,000 3,500,000 The company's WACC is 11% and is used as the required rate of return. The company's tax rate is 30%. Clothing Cosmetics Required: 1. Calculate the ROI and residual income for each division, assuming that investment is measured as assets less current liabilities. ROI: Imputed cost of investment Income measure Investment measure RI Clothing After-tax operating income WACC Total assets Current liabilities EVA thing 2. Compute each division's Economic Value Added. Clothing Assets $11,500,000 9,000,000 Cosmetics Cosmetics Cosmetics Cora Manufacturing makes fashion products and has two divisions: clothing and cosmetics. The company's results for the past year are as follows: Operating Income Current Liabilities $1,750,000 $2,500,000 2,400,000 3,500,000 The company's WACC is 11% and is used as the required rate of return. The company's tax rate is 30%. Clothing Cosmetics Required: 1. Calculate the ROI and residual income for each division, assuming that investment is measured as assets less current liabilities. ROI: Imputed cost of investment Income measure Investment measure RI Clothing After-tax operating income WACC Total assets Current liabilities EVA thing 2. Compute each division's Economic Value Added. Clothing Assets $11,500,000 9,000,000 Cosmetics Cosmetics Cosmetics
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To calculate the ROI Return on Investment and residual income for each division we first need to cal... View the full answer
Related Book For
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan
Posted Date:
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