Return on Investment (ROI)The following information relates to the operating performance of two divisions of Campbell Food InternationalCompany's: 1) Soup and Sauces and 2) Beverages.(all figures are in millions except for WACC)SalesDivision 1Division 2$2,000$300NetIncome$240$60The tax rate is 25%.REQUIRED:(a) Compute each division's after-tax margin.AverageOperatingAssets$1,500$375(b) Compute each division's after-tax return on investment (ROI).AverageCurrentLiabilities$400$150WeightedAverage Costof Capital16%16%(c) Comments on the results of the preceding calculations and what would you recommend for the company to do toimprove return on investment (ROI).

(a) Division 1 Division 2 Sales 2000 300 Net Income 240 60 Less: Tax @25% 60 15 Profit…

Answered: Division 1 Division 2 The tax rate is…

Division 1 Division 2 The tax rate is 25%. Sales $2,000 $300 Net Income $240 $60 Average Operating Assets $1,500 $375 Average Current Liabilities $400 $150 Weighted Average Cost of Capital 16% 16%

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 1MAD

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