ROI, RI, EVA. Performance Auto Company operates a new car division (that sells high- performance sports cars) and a performance parts division (that sells performance-improvement parts for family cars). Some division financial measures for 2017 are as follows: Home Page Layout Data Formulas Insert New Car Division Performance Parts Division 2 Total assets 3 Current liabilities 4 Operating income 5 Required rate of retun $33,000,000 $ 6,600,000 $ 2,475,000 12% $28,500,000 $ 8,400,000 $ 2,565,000 12%
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Performance Auto Company, whose tax rate is 40%, has two sources of funds: long-term debt with a market value of $18,000,000 at an interest rate of 10% and equity capital with a market value of $12,000,000 and a
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- The following is partial information for Charleston Company’s most recent year of operation. It manufactures lawn mowers and categorizes its operations into two divisions: Bermuda and Midiron. Bermuda Division Midiron Division Sales revenue ? $ 600,000 Average invested assets $ 2,500,000 ? Net operating income $ 160,000 $ 150,000 Profit margin 20 % ? Investment turnover ? 0.16 Return on investment ? ? Residual income $ 40,000 $ (30,000 ) Required:1. Without making any calculations, determine whether each division’s return on investment is above or below Charleston’s hurdle rate.2. Determine the missing amounts in the preceding table.3. What is Charleston’s hurdle rate?4-a. Suppose Charleston has the opportunity to invest additional assets to help expand the company’s market share. The expansion would require an average investment of $2,800,000 and would generate $140,000 in additional income. Calculate…Zuds, Helpful Hardware's manufacturing division of lawn-mowing and snow removal equipment, segments its business according to customer type: Professional and Residential. The following divisional information was available for the past year. View the divisional information. Requirements Round all of your answers to four decimal places. 1. Calculate each division's ROI. 2. Calculate each division's profit margin. Interpret your results. 3. Calculate each division's asset turnover. Interpret your results. 4. Use the expanded ROI formula to confirm your results from Requirement 1. What can you conclude?Please send answer in chart set up Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center). Investment Center Sales Income AverageInvested Assets Electronics $ 39,840,000 $ 2,988,000 $ 16,600,000 Sporting goods 25,200,000 2,142,000 12,600,000 1. Compute return on investment for each department. Using return on investment, which department is most efficient at using assets to generate returns for the company?2. Assume a target income level of 11% of average invested assets. Compute residual income for each department. Which department generated the most residual income for the company?3. Assume the Electronics department is presented with a new investment opportunity that will yield a 15% return on investment. Should the new investment opportunity be accepted?
- Rundle Transport Company divides its operations into four divisions. A recent income statement for its West Division follows. RUNDLE TRANSPORT COMPANY West Division Income Statement for Year 3 Revenue $ 620,000 Salaries for drivers (470,000 ) Fuel expenses (62,000 ) Insurance (82,000 ) Division-level facility-sustaining costs (52,000 ) Companywide facility-sustaining costs (142,000 ) Net loss $ (188,000 ) Required By how much would companywide income increase or decrease if West Division is eliminated? Should West Division be eliminated? Assume that West Division is able to increase its revenue to $690,000 by raising its prices. Determine the amount of the increase or decrease that would occur in companywide net income if the segment were eliminated. Should West Division be eliminated if revenue were $690,000? What is the minimum amount of revenue required to justify continuing the operation of West Division?Vernon transport company divides its operations into four divisions. A recent statement for its West Division folows Vernon Transport Comapny Wesy division Income Statement for year 3 Revenue $670,000 Salaries for drivers (520,000) Fuel expenses (67,000) Insurance (87,000) Division-level facility- sustaining costs (57,000) Companywide facility-sustaining costs (147,000) Net loss $208,000 Required a) By how much would cormpanywide income increase or decrease if West Division is estimated? Should West Division be eliminated? b) assume that West Division is able to increase its revenue to $760,000 by raising its prices. Determine the amount of the increase or decrease that would occur in companywide net income if the segemnt were eliminated. Should West Division be eliminated if revenue were $760,000? c) What is the mininum amount of revenue required to Jusify continuing the operation of West Divison? Complete this question by entering your answer in the table below. Income Would…Sunland, Inc. has three divisions: Bud, Wise, and Er. The results of operations for May, 2022 are presented below. Bud Wise Er Total Units sold 7,800 13,000 5,200 26,000 Revenue $182,000 $130,000 $104,000 $416,000 Less variable costs 83,200 67,600 41,600 192,400 Less direct fixed costs 36,400 49,400 31,200 117,000 Less allocated fixed costs 15,600 26,000 10,400 52,000 Net income $46,800 $(13,000) $20,800 $54,600 All of the allocated costs will continue even if a division is discontinued. Sunland allocates indirect fixed costs based on the number of units to be sold. Since the Wise division has a net loss, Sunland is concerned that it should be discontinued. Sunland thinks that if the division is closed, that sales at the Bud division will increase by 12% while sales at the Er division will stay the same. (a)…
- CarniTrin is a manufacturer of Carnival costumes in a highly competitive market. Thecompany's management team is seeking guidance on the use of financial performancemeasures to identify the key drivers of the company's financial performance and develop astrategy to improve it.The following data relate to the company for the year 2022: In its clothing division, the company has $6,000,000 invested in assets. After-taxoperating income from sales of clothing in 2022 is $900,000. Income for the clothingdivision has grown steadily over the last few years. The cosmetics division has $14,000,000 invested in assets and an after-tax operatingincome in 2022 of $1,900,000. The weighted-average cost of capital for CarniTrin is 10% and the 2021’s after-taxreturn on investment for each division was 15%. The general manager of CarniTrin has asserted that in the future, managers shouldhave their compensation structure aligned with their performance measures with nofixed salaries. However, the…CarniTrin is a manufacturer of Carnival costumes in a highly competitive market. Thecompany's management team is seeking guidance on the use of financial performancemeasures to identify the key drivers of the company's financial performance and develop astrategy to improve it. The following data relate to the company for the year 2022: In its clothing division, the company has $6,000,000 invested in assets. After-taxoperating income from sales of clothing in 2022 is $900,000. Income for the clothingdivision has grown steadily over the last few years. The cosmetics division has $14,000,000 invested in assets and an after-tax operatingincome in 2022 of $1,900,000. The weighted-average cost of capital for CarniTrin is 10% and the 2021’s after-taxreturn on investment for each division was 15%. The general manager of CarniTrin has asserted that in the future, managers shouldhave their compensation structure aligned with their performance measures with nofixed salaries.…CarniTrin is a manufacturer of Carnival costumes in a highly competitive market. Thecompany's management team is seeking guidance on the use of financial performancemeasures to identify the key drivers of the company's financial performance and develop astrategy to improve it. The following data relate to the company for the year 2022: In its clothing division, the company has $6,000,000 invested in assets. After-taxoperating income from sales of clothing in 2022 is $900,000. Income for the clothingdivision has grown steadily over the last few years. The cosmetics division has $14,000,000 invested in assets and an after-tax operatingincome in 2022 of $1,900,000. The weighted-average cost of capital for CarniTrin is 10% and the 2021’s after-taxreturn on investment for each division was 15%. The general manager of CarniTrin has asserted that in the future, managers shouldhave their compensation structure aligned with their performance measures with nofixed salaries. However, the…
- Tabouk’s Manufacturing Company has two divisions: Garden Division and Farm Division. The following report is for the most recent operating period of 2019: Total Company Garden Division Farm Division Sales revenue $390,000 $270,000 $120,000 Variable expenses 95,400 59,400 36,000 Contribution margin 294,600 210,600 84,000 Traceable fixed expenses 223,000 165,000 58,000 Division profit margin 71,600 $45,600 $26,000 Common fixed expense 46,800 Net operating income $24,800 As a manager at the company your responsibilities are planning and directing the company, you are required to: 1-What would be the company's overall net operating income if the company operated at its two division's break-even points?ndi Systems Inc., headquartered in Bengaluru, India, provides specialized information technology (IT) services and consists of three divisions: (1) insurance, (2) retail and (3) hospitality. For 2023, it recorded the following data: Insurance Retail Hospitality Total Sales revenues $ 4,017,000 $ 5,824,000 $ 1,944,000 $ 11,785,000 Variable costs (% of sales) 30 % 41 % 44 % Traceable fixed costs 2,121,000 2,852,000 724,500 5,697,500 Common fixed costs 1,200,000 Required: 1. Prepare a segment performance report showing the segment margin in dollars and percentages for all three divisions. Use Exhibit 12–3 as a guide. (Round "Percentage" answers to 2 decimal places.) 2. Which segment is most profitable? multiple choice Insurance Retail HospitalityCarniTrin is a manufacturer of Carnival costumes in a highly competitive market. The company's management team is seeking guidance on the use of financial performance measures to identify the key drivers of the company's financial performance and develop a strategy to improve it. The following data relate to the company for the year 2022: In its clothing division, the company has $6,000,000 invested in assets. After-tax operating income from sales of clothing in 2022 is $900,000. Income for the clothing division has grown steadily over the last few years. The cosmetics division has $14,000,000 invested in assets and an after-tax operating income in 2022 of $1,900,000. The weighted-average cost of capital for CarniTrin is 10% and the 2021’s after-tax return on investment for each division was 15%. The general manager of CarniTrin has asserted that in the future, managers should have their compensation structure aligned with their performance measures with no fixed salaries. However,…