A result from First Corporation’s most recent year of operations is presented in the following table.
Operating income................................................................................. $ 9,000
Total assets .......................................................................................... $15,000
Current liabilities ................................................................................. $ 4,000
Sales..................................................................................................... $36,000
Target rate of return............................................................................. 15%
Weighted average cost of capital.......................................................... 12%
Tax rate............................................................................................... 30%
Requirements
1. Calculate the profit margin, asset turnover, and return on investment (ROI).
2. Calculate the residual income.
3. Calculate the economic value added (EVA).