XYZ Inc. presented the following info regarding its two divisions classified as investmentB DivisionOperating IncomeOperating assetsA Division300,0001,200,000500,0002,500,0002,750,0000375,000Net Sales1,500,000240,000Current LiabilitiesWACC15%12.5%Current Operating Asset500,000750,0000The corporation is subject to 35% tax rate. Weighted cost of capital isBased on book value of long-term asset. Assuming the imputed interest rate is 18%.REQUIREMENTS:1. In using EVA, what is the EVA of the division that is performing better?2. In using ROI, what is the ROI of the division that is performing better?3. In using residual income, what is the residual income of the division that is performing better?|

Economic value added (EVA) refers to a measure of evaluating the companies performance based on the…

Answered: XYZ Inc. presented the following info…

Principles of Accounting Volume 2

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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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Blossom and Telecommunications Corporation has three divisions. The names of these divisions, along with the after-tax cost ofcapital for each division and the market value of the assets in each division, are as follows:Division NameCost of CapitalMV of AssetsInfrastructure development6.45$185,000,000Power5.50$241,000,000Telecommunications6.10$500,000,000EvWhat is the overall after-tax cost of capital for Blossom and Telecommunications? (Round answer to 2 decimal places, e.g. 52.75%.)After-tax cost of capital
The following data relates to the ABC Corporation and its A Division. A Division sales P 8,000,000 A Division operating income P 480,000 A Division total assets P 2,000,000 A Division current liabilities P 600,000 Corporate target rate of return 14% Corporate weighted average cost of capital 10% Corporate effective tax rate 30% What is the A Divisions Economic Value Added (EVA)?
The following data relates to the XYZ Corporation and its X Division. X Division sales P 8,000,000 X Division operating income P 480,000 X Division total assets P 2,000,000 X Division current liabilities P 600,000 Corporate target rate of return 14% Corporate weighted average cost of capital 10% Corporate effective tax rate 30% What is the X Divisions Economic Value Added (EVA)?
The following results are available for Division X and Y:Division X Division YProfit before interest and tax P185 000 P172, 000Capital employed P1, 540, 000 P1, 650, 000The cost of capital is 10%.Calculate and comment on the performance of the departments based on:a. Return on capital employed (4 marks)b. Residual incom
Data for the wholesale products division of ABC Co. are as follows: Earnings before interest and taxes P30,000,000; Depreciation expense P10,000,000; Interest Expense P1,000,000; Change in net working capital P5,000,000; Capital expenditures P4,000,000; Invested capital P50,000,000; Weighted average cost of capital 10%; Tax rate 30%. Considering the impact of income tax, the economic value added by the division must be nearest to P15,300,000 P16,000,000 P16,300,000 P25,000,000 P30,000,000
The following data are taken from the records of Dove Company, a division of Oasis Corporation for the year ended December 31, 2021 Sales 120,000,000.00Less: Variable Cost and Expenses 8,000,000.00Contribution Margin 4,000,000.00Less:: Direct Fixed Cost and Expenses 1,000,000.00Segment Income 3,000,000.00 The company used an average assets of P8,000,000.00 in 2021. The cost of capital is 12% Calculate the following:1. Return on Sales2. Asset Turnover3. ROI4. Residual Income
The Global Products Corporation has three subsidiaries. Medical Supplies Heavy Machinery Electronics Sales $20,040,000 $5,980,000 $4,730,000 Net Income (after taxes) 1,700,000 592,000 402,000 Assets 8,340,000 8,760,000 3,570,000 If the $8,760,000 investment in the heavy machinery division is sold off and redeployed in the medical supplies subsidiary at the same rate of return on assets currently achieved in the medical supplies division, what will be the new return on assets for the entire corporation?
The following are selected data for the division for the consumer products of ABC Corp for 2019: Sales 50,000,000 Average invested capital (assets) 20,000,000 Net income 2,000,000 Cost of capital 8% What is the asset turn-over ratio for the division? 0.25 2.5 8 10% Group of answer choices 1 2 3 4
The Global Products Corporation has three subsidiaries: Medical Supplies Heavy Machinery Electronics Sales.......... $20,040,000 $5,980,000 $4,730,000 Net income 1,700,000 592,000 402,000 (after taxes) Assets............8,340,000 8,760,000 3,570,000 a. Which division has the lowest return on sales? b. Which division has the highest return on assets? c. Compute the return on assets for the entire corporation. d. If the $8,760,000 investment in the heavy machinery division is sold off and redeployed in the medical supplies subsidiary at the same rate of return on assets currently achieved in the medical supplies division, what will be the new return on assets for the entire corporation?
The following are available for divison X and Y Profit before interest and tax X 185 000 Y172 000 Capital employed X 1 540 000 Y 1 650 000 The cost of capital is 10% comment on the performance of the departments based on a. Return on capital employed b.residual income
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Divisional Income Statements and Return on Investment Analysis E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows: Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue $630,000 $650,000 $640,000 Operating expenses 340,200 308,000 484,000 Invested assets 2,300,000 1,900,000 1,300,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. Required: 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 20Y8 Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue $fill in…

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