The summary of financial statements for division A is given below. Statement of Financial Position Statement...
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The summary of financial statements for division A is given below. Statement of Financial Position Statement of Profit or Loss RM'000 RM'000 Noncurrent assets 1,500 Revenue 4,000 Current assets 600 Operating cost 3,600 Total assets 2,100 Operating profit 400 Interest paid 70 Divisional equity 1,000 Profit before tax 330 Long term borrowings 700 Current liabilities 400 Total equity and liabilities 2,100 The cost of capital for the division is estimated at 12% each year Annual rate of return on long term loans is 10% All decision concerning the division's capital structure are taken by central management. Required to calculate the: a. Divisional return on investment b. Net profit margin c. Turnover ratio d. Residual income The summary of financial statements for division A is given below. Statement of Financial Position Statement of Profit or Loss RM'000 RM'000 Noncurrent assets 1,500 Revenue 4,000 Current assets 600 Operating cost 3,600 Total assets 2,100 Operating profit 400 Interest paid 70 Divisional equity 1,000 Profit before tax 330 Long term borrowings 700 Current liabilities 400 Total equity and liabilities 2,100 The cost of capital for the division is estimated at 12% each year Annual rate of return on long term loans is 10% All decision concerning the division's capital structure are taken by central management. Required to calculate the: a. Divisional return on investment b. Net profit margin c. Turnover ratio d. Residual income
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a Divisional Return on Investment Profit Before Tax Total Assets Divis... View the full answer
Related Book For
Financial Accounting: A Business Process Approach
ISBN: 9780136115274
3rd edition
Authors: Jane L. Reimers
Posted Date:
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