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5. Bergher is a national paint manufacturer and retailer. The company is segmented into five divisions: Paint stores, Consumers, Automotive, International and Administration. The following
5. Bergher is a national paint manufacturer and retailer. The company is segmented into five divisions: Paint stores, Consumers, Automotive, International and Administration. The following is selected divisional information for its two largest divisions. Paint stores and Consumer in thousands of dollars: Sales Operating income $478,000 184,000 Paint stores Consumer $3,970,000 1,275,000 Total assets Current liabilities $1,390,000 $355,000 1,585,000 610,000 Management has specified a 20% target rate of return. The company's weighted average cost of capital is 17%. The company effective tax rate is 36%. Required: a) Calculate each division's ROI b) Calculate each division's profit margin and interpret the result. 2 e) Calculate each division's capital turnover and interpret the results. d) Use the expanded ROI formula and confirm the result at #1 above. e) Calculate the EVA for each division and interpret the results
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