Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

20-21 >> ACT 310-2 (Lec) >> Management Accounting Fareast Group is a conglomerate with presence in various continents. Return on investment (ROI) has been the

image text in transcribed
20-21 >> ACT 310-2 (Lec) >> Management Accounting Fareast Group is a conglomerate with presence in various continents. Return on investment (ROI) has been the Group managers favorite tool used in meaturing divisional performance. In the past two years, the Group's automobile division showed decreasing ROI results as follows: 2018 ROI = (AED 2,000,000/AED20,000,000) * (AED 20,000,000/AED 10,000,000) - 0.20 2019 ROI = (AED2,400,000/AED25,000,000) * (AED25,000,000/AED 15,000,000) = 0.16 Profit/sales x sales/asset The top management of the Group was unamused by the poor performance as they required 25 percent in return for their additional investment in the automobile division Required a. The Group's top management has sought your advice as to why the automobile failed to perform up to expectation. Support your argument with calculations, marks) b. In a meeting with the Group's top management, you came to learn that the ROI calculations given for the automobile division comprised income from operations, net sales, and the closing value of invested capital for each year. They also mentioned to you a keyword "Dupont", In your mind you are considering an alternative to make the ROI values read better. Propose your alternative and discuss. (5 marks) Paragraph JO

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing An International Approach

Authors: Bahram Soltani

1st Edition

9780273657736

More Books

Students also viewed these Accounting questions

Question

positive approaches to listening to a customer include ?

Answered: 1 week ago