Zims, My Hardware's manutacturing division of lawn-mowing and snow removal equpment, segments its business according to...

Transcribed Image Text:

Zims, My Hardware's manutacturing division of lawn-mowing and snow removal equpment, segments its business according to customer type Professional and Residential The following divisional information was available for the past year m (Click the icon to view the divisional information.) Requirements 1. Calculate each division's RI. Interpret your results. 2. Calculate each dvision's EVA. Interpret your results. 3. Describe the conceptual and computational similarities and differences between RI and EVA Divisional information Operating Total Current Sales Income Assets Liabilities Residential $ 1,314,400 S 65,720 $ 212,000 $ 74,000 Professional 1,395,000 167.400 372.000 148,000 Assume that management has a 25% target rate of return for each division. Also, assume that Zims's weighted average cost of capital is 13% and its effective tax rate is 35%. Print Done Zims, My Hardware's manutacturing division of lawn-mowing and snow removal equpment, segments its business according to customer type Professional and Residential The following divisional information was available for the past year m (Click the icon to view the divisional information.) Requirements 1. Calculate each division's RI. Interpret your results. 2. Calculate each dvision's EVA. Interpret your results. 3. Describe the conceptual and computational similarities and differences between RI and EVA Divisional information Operating Total Current Sales Income Assets Liabilities Residential $ 1,314,400 S 65,720 $ 212,000 $ 74,000 Professional 1,395,000 167.400 372.000 148,000 Assume that management has a 25% target rate of return for each division. Also, assume that Zims's weighted average cost of capital is 13% and its effective tax rate is 35%. Print Done

Answer rating: 100% (QA)

Solution 1 Residual Income Minimum Operating Operating X required RI Income Assets return Residentia... View the full answer