User Account

All Pages

Which division is more profitable

Assignment Help Accounting Basics
Reference no: EM131739790

Question: Sapsora Company uses ROI to measure the performance of its operating divisions and to reward division managers. A summary of the annual reports from two divisions is shown below. The company's weighted-average cost of capital is 12 percent.
                                                                                               Division A              Division B

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,000,000            $8,750,000

Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  500,000              1,750,000

After-tax operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,000,000              1,180,000

ROI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25%                       14%

a. Which division is more profitable?

b. Would EVA more clearly show the relative contribution of the two divisions to the company as a whole? Show the computations.

c. Suppose the manager of Division A was offered a one-year project that would increase his investment base by $250,000 and show a profit of $37,500. Would the manager choose to invest in the new project?

Reference no: EM131739790

Questions Cloud

Discuss successfully entered the political process : Should Israel do the same with Hamas now that they have successfully entered the political process via 2006 elections in the West Bank
What standards have been in place for bim : What tools (software), codes, and standards have been in place for BIM in fire protection or fire safety?
Length of the requirements for liquidating the partnership : Sand, Mell, and Rand are partners who share incomes and losses in a 1:4:5 ratio. After lengthy disagreements among the partners and several unprofitable periods
Discuss items offenders apparently tend to pay attention : Discuss the three items offenders apparently tend to pay attention to when evaluating a potential burglary target
Which division is more profitable : Sapsora Company uses ROI to measure the performance of its operating divisions and to reward division managers. A summary of the annual reports.
Create a general plan that includes a description of grade : Common characteristics of problem-based learning, addressing an open-ended problem posed to each learning group (see guidance).
What is the legacy of the confederate memorials : What is the legacy of the Confederate memorials? Who was the sculptor? What category of Art History is the painting or sculpture being long to?
Calculate sas wacc of the given problem : SAS's outstanding 11% coupon rate debentures mature in 15 years, pay interest semiannually and are callable at $1,015 in 3 years.
How can we as professionals help close this gap : How can we as professionals help close this gap? What can you do in your professional role to mediate the conflict?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd