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5. Suppose you are an officer for Werthman Corporation and are presented with the following information regarding your two operating divisions: U.S. European Division Division
| 5. Suppose you are an officer for Werthman Corporation and are presented with the following information regarding your two operating divisions: | |||||||
| U.S. | European | ||||||
| Division | Division | ||||||
| Revenues | $27,800 | $31,400 | |||||
| Net operating profit after tax (NOPAT) | 11,900 | 9,800 | |||||
| Weighted average cost of capital (WACC) | 7.00% | 7.00% | |||||
| Beginning Net Operating Assets (NOA) | 83,160 | 79,060 | |||||
| Ending Net Operating Assets (NOA) | 89,580 | 84,900 | |||||
| a. | Compute the residual operating income (ROPI) for each division. | ||||||
| b. | Compare the residual operating income (ROPI) for each division. Which division is performing better? | ||||||
| c. | What would you recommend to each divisions top manager to improve its performance? | ||||||
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Auditing And Society Research On Audit Practice And Regulations
Authors: Wally Smieliauskas, Minlei Ye, Ping Zhang
1st Edition
1138314129, 978-1138314122
