Please see picture for the full problem and table.a-1. Evaluate the performance of the two divisions assuming BMI uses return on investment (ROI). (Round your final answers to nearest whole percentage value.) Back Mountaln Industries (BMI) has two divisions: East and West. BMI has a cost of capital of 10 percent. Selected financlal information(In thousands of dollars) for the first year of business follows:EastWest$6,800Sales revenue$1,500Income450690Investnent (beginning of year)Current liabilities (beginning of year)2,5003, 500250250R&D expenditures750650*R&D is assumed to benefit two perlods. All R&D is spent at the beginning of the year.Required:a-1. Evaluate the performance of the two divisions assuming BMI uses retum on investment (ROI). (Round your final answers tonearest whole percentage value.)DivisionsROIEastWesta-2 Which division had the better performance?O EastOWest

Investment: It is an asset or item which is purchased and held to generate income or for…

Back Mountain Industries (BMI) has two divisions: East and West BMI has a cost of capital of 10 percent. Selected financial Information (In thousands of dollars) for the first year of business follows: East $1, 500 West Sales revenue Income Investnent (beginning of year) Current liabilities (beginning of year) R&D expenditures $6,e00 690 3, 580 250 45e 2,5ee 250 750 650 *R&D Is assumed to benefit two periods. All R&D is spent at the beginning of the year. Required: a-1. Evaluate the performance of the two divisions assuming BMI uses return on investment (ROI). (Round your final answers to nearest whole percentage value.) Divisions ROI East West a-2 Which division had the better performance? O East O West

Back Mountain Industries (BMI) has two divisions: East and West BMI has a cost of capital of 10 percent. Selected financial Information (In thousands of dollars) for the first year of business follows: East $1, 500 West Sales revenue Income Investnent (beginning of year) Current liabilities (beginning of year) R&D expenditures $6,e00 690 3, 580 250 45e 2,5ee 250 750 650 *R&D Is assumed to benefit two periods. All R&D is spent at the beginning of the year. Required: a-1. Evaluate the performance of the two divisions assuming BMI uses return on investment (ROI). (Round your final answers to nearest whole percentage value.) Divisions ROI East West a-2 Which division had the better performance? O East O West

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 3PA: Macon Mills is a division of Bolin Products. Inc. During the most recent year, Macon had a net...

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Macon Mills is a division of Bolin Products. Inc. During the most recent year, Macon had a net income of $40 million. Included in the income was interest expense of $2,800,000. The companys tax rate was 40%. Total assets were $470 million, current liabilities were $104,000,000, and $72,000,000 of the current liabilities are noninterest bearing. What are the invested capital and ROI for Macon?
Consider the data for each of the following four independent companies: Required: 1. Calculate the missing values in the above table. (Round rates to four significant digits.) 2. Assume that the cost of capital is 9 percent for each of the four firms. Compute the residual income for each of the four firms.
Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of $30,000, and invested assets of $600000. What is the return on investment for Division A? A. 20% B. 25% C. 33% D. 40%
Deere Company (DE) manufactures and distributes farm and construction machinery that it sells around the world. In addition to its manufacturing operations, Deeres credit division loans money to customers to finance the purchase of their farm and construction equipment. The following information is available for three recent years (in millions except per-share amounts): 1. Calculate the following ratios for each year. Round ratios and percentages to one decimal place, except for per-share amounts, which should be rounded to the nearest cent. a. Return on total assets b. Return on stockholders' equity c. Earnings per share d. Dividend yield e. Price-earnings ratio 2. Based on these data, evaluate Deeres profitability.
Last Resort Industries Inc. is a privately held diversified company with five separate divisions organized as investment centers. A condensed income statement for the Specialty Products Division for the past year, assuming no support department allocations, along with asset information is as follows: The manager of the Specialty Products Division was recently presented with the opportunity to add an additional product line, which would require invested assets of 14,400,000. A projected income statement for the new product line is as follows: The Specialty Products Division currently has 27,000,000 in invested assets, and Last Resort Industries Inc.s overall return on investment, including all divisions, is 10%. Each division manager is evaluated on the basis of divisional return on investment. A bonus is paid, in 8,000 increments, for each whole percentage point that the divisions return on investment exceeds the company average. The president is concerned that the manager of the Specialty Products Division rejected the addition of the new product line, even though all estimates indicated that the product line would be profitable and would increase overall company income. You have been asked to analyze the possible reasons the Specialty Products Division manager rejected the new product line. a. Determine the return on investment for the Specialty Products Division for the past year. b. Determine the Specialty Products Division managers bonus for the past year. c. Determine the estimated return on investment for the new product line. Round percentages to one decimal place and the investment turnover to two decimal places. d. Why might the manager of the Specialty Products Division decide to reject the new product line? Support your answer by determining the projected return on investment for 20Y6, assuming that the new product line was launched in the Specialty Products Division and 20Y6 actual operating results were similar to those of 20Y5. e. Suggest an alternative performance measure for motivating division managers to accept new investment opportunities that would increase the overall company income and return on investment.
Spartans Inc. has the following information for its two divisions: North and South North South Sales $6,000,000 $6,000,000 Expenses $3,800,000 $3,800,000 Oper. Income $2,200,000 $2,200,000 Taxes $660,000 $770,000 Taxable Inc. $1,540,000 $1,430,000 Invested Assets $13,000,000 $15,000,000 Spartans Inc. has a 10% hurdle rate. Calculate the following for each division: Return on Investment (ROI) North Division ________________ South…
Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost of capital of 15 percent. Selected financial information (in thousands of dollars) for the first year of business follows: East West Sales revenue $ 1,000 $ 5,000 Income 200 390 Investment (beginning of year) 2,000 3,000 Current liabilities (beginning of year) 200 200 R&D expendituresa 500 400 aR&D is assumed to benefit two periods. All R&D is spent at the beginning of the year. Required: a-1. Evaluate the performance of the two divisions assuming BMI uses return on investment (ROI).
D&G Textile company is evaluating two different operating structures. Data about those structures are shown below. Annual interest expense of the firm is $200, it has common shares outstanding of 2,000, and a tax rate of 20 percent.