1. ROI:

What does ROI tell management?

Which segments have the best and worst ROI or are they roughly the same (how do they compare)?

How could a segment of this company improve its ROI? Give me an example of a specific action that could be taken to improve ROI.

2. Sales Margin:

What does Sales Margin tell management?

Which segments have the best and worst or are they roughly the same (how do they compare)?

How could a segment of this company improve its sales margin? Give me an example of a specific action that could be taken to improve sales margin.

3. Capital Turnover:

What does Capital Turnover tell management?

Which divisions have the best and worst? How do they compare?

How could a segment of this company improve its capital turnover? Give me an example of a specific action that could be taken to improve capital turnover.

4. Residual Income:

What does Residual Income tell management?

Do any of the segments fall short of managements expectations? How can you tell?

5. Allocation decision:

If you were upper management (CEO of the whole corporation), and had excess funds to allocate among divisions, which division would you allocate those funds to and why?

6. Responsibility Accounting

What type of Responsibility centers are i) the 6 divisions, ii) corporate?

7. Measurement issues

What is the risk when companies use the net book value for assessing ROI.

ROI in Six Divisions Capital Turnover 2.49 2.83 80% Division Frito Lay North America (FLNA) Quaker Foods North America (QFNA) North America Beverages (NAB) Latin America Europe Sub-Saharan Africa (ESSA) Asia, Middle East and North Africa (AMENA) ROI 76% 73% 8% 16% 8% 18% Sales Margin 31% 26% 11% 14% 12% 20% Residual Income US$3,363.75 US$419.50 (US$5,193.50) (US$565.50) (US$2,988.50) (US$436.25) 70% 0.71 1.14 0.66 0.92 60% 50% 40% II.... 30% 20% 10% 0% Frito-Lay Quaker Foods North America Latin America Europe Sub Asia, Middle North America North America Beverages Saharan Africa East and North (FLNA) IQFNA) (NAB) (ESSA) Africa (AMENA)