Question
Assume you are the management accountant for the Foleo Group, and nine months ago you helped Tracey Chen introduce a performance measurement system across the
Assume you are the management accountant for the Foleo Group, and nine months ago you helped Tracey Chen introduce a performance measurement system across the organisation based on ROI as the sole measure.Tracey has now asked you to assist her in assessing the effectiveness of the new system since its introduction for each of the business units and H.O. Departments.To begin the process, she asks you to analyse the Foleo Accessories business - Tracey is quietly confident that performance has improved, considering the bonus payments across the business unit have been paid out each month since the system was implemented.You collect the data you need for your analysis of the performance of Foleo Accessories for the last nine months, compared with the same period last year, and compile it on the document below.
(a) From the data you have collected, and knowing that Foleo uses total assets less current liabilities to calculate the Invested Capital component for ROI, calculate the ROIs for current period and for the same period last year for Foleo Accessories.
(HINT:Use the profit controllable by Foleo Accessories for your calculations as you are evaluating the business unit.Show all your workings to maximise your marks.)
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