Would abcs managers be in favor of this purchase

Assignment Help Managerial Accounting
Reference no: EM132927850

Question - ABC rewards its managers on (before tax) Return on Assets (ROA). ABC has revenues of $100m, and expenses (including interest expense) of $82m. Total assets are $90m. ABC's weighted average cost of capital is 12%. ABC is considering buying XYZ Inc., which has revenues of $15m, and expenses of $14m (including interest expense).

Required -

a. Would ABC's managers be in favor of this purchase? Explain

b. Would ABC's shareholders be in favor? Explain.

Reference no: EM132927850

Questions Cloud

Differentiate between attitude and perception : Question 1) Differentiate between attitude and perception by giving one example each?
How much is the initial carrying amount of the bonds : The bonds were retired on January 7, 2020 at 105 and incurred a transaction cost of P20,000. How much is the initial carrying amount of the bonds
Explain the purposes of performance appraisals : Explain the purposes of performance appraisals and the reasons why sometimes they fail.
Importance of delegation to leadership in the organization : A. Explain to Janet the importance of delegation to leadership in the organization.
Would abcs managers be in favor of this purchase : ABC has revenues of $100m, and expenses (including interest expense) of $82m. Total assets are $90m. Would ABCs managers be in favor of this purchase
What are the advantages and disadvantages of globalization : What are the advantages and disadvantages of globalization, as well as their causes.
What are potential pitfalls of orientation : You are an inventor of a new product. As an engineer, you have decided that a sales orientation would suit your new firm the best.
Various functions of human resource management : What are the various functions of Human Resource Management and how are the functions related to one another?
Describe team leadership : Describe team leadership and its characteristics. Then, describe two challenges teams may face when leading an organization. Finally, explain whether team leade

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

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!

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