Data table The company is segmented into five divisions: Paint Stores (branded retail location), Consumer (paint sold through stores such as Home Depot and Lowe's), Automotive (sales to auto manufacturers), International, and Administration. The following is selected hypothetical divisional information for the company's two largest divisions: Paint Stores and Consumer (in thousands of dollars). Requirernent 2. Calculate each divisioris sales margin. Interpret your results. Enter the formula, then calculate the salos margin for each division. (Enter the sales margin as a percent rounded to the nearest hundredih of a percentage. X Xoce Interpret your results The Dhision is more profitable on each dollar of sales Requirement 3. Calculate each division's capital turnover Interpret your results Requirement 3. Calculate each division's capital furnover. Interpret your results First enterthe formula, then calculate the capial turnover for oach division. (Round to two decimal places.) The Civision is more efficient in generafing sales with its assets Requirement 4. Use the expanded ROI formula to confirm your results from Requirement 1 Interpeet your fesults First enter the expanded ROI formula, then calculate the ROl for each division (Enter the ROt as a percent rounded to the nearest hundresth of a percentage X XX\% ) than the Consumer Division's efficiency. These results cause the Paint Stores Dhision's ROl to be the Consumer Division's ROI Requirement 5. Calculate each division's RI. Interpret your results and offer recommendations for any divison with negative RI: First enter the formula, then calculate the Ri for each division. (Enter the amount in thousands. Use pareotheses of a minus siga for negative tesidual incomes) Interprel your results and offer recommendations for any division with negative R : meeting managements target rate of rotum The shouid work on inprowng its Improving this may help the division achiave posarve rosidual income. Requirement 6. Tolal asset data were providod in this problem If you wore to gather this information froms an annual report, how would you measure total assets? Describe your measurement choices and some of the pros and cons of those choices. Most companies use the asset balance since the income used in the ROI calculation is eaned over the year Most companies use the asset balance since the incorne used in the ROl calculation is eamed over the yoat Management must also decide whether they wish to use the gross book value of assets or the net book value of assets The book value is otten used because it is easily pulled from the balance sheet Howviver, Rol using that value will artifically rise over time due to Requirement7. Describe some of the factors that management considers when setting its minimum target rate of retum Requirement 8. Explain why some fims prefer to use Ri mather than ROl for performance moosurement RI does a batter job of Requiremmnt 9. Explain why budget versus actual performance reports ate insufficient for evaluating the performance of investment centers investrment centers are responsible for do not measure Budget yersus actual pefformance reports are insuificht bocause they Data table The company is segmented into five divisions: Paint Stores (branded retail location), Consumer (paint sold through stores such as Home Depot and Lowe's), Automotive (sales to auto manufacturers), International, and Administration. The following is selected hypothetical divisional information for the company's two largest divisions: Paint Stores and Consumer (in thousands of dollars). Requirernent 2. Calculate each divisioris sales margin. Interpret your results. Enter the formula, then calculate the salos margin for each division. (Enter the sales margin as a percent rounded to the nearest hundredih of a percentage. X Xoce Interpret your results The Dhision is more profitable on each dollar of sales Requirement 3. Calculate each division's capital turnover Interpret your results Requirement 3. Calculate each division's capital furnover. Interpret your results First enterthe formula, then calculate the capial turnover for oach division. (Round to two decimal places.) The Civision is more efficient in generafing sales with its assets Requirement 4. Use the expanded ROI formula to confirm your results from Requirement 1 Interpeet your fesults First enter the expanded ROI formula, then calculate the ROl for each division (Enter the ROt as a percent rounded to the nearest hundresth of a percentage X XX\% ) than the Consumer Division's efficiency. These results cause the Paint Stores Dhision's ROl to be the Consumer Division's ROI Requirement 5. Calculate each division's RI. Interpret your results and offer recommendations for any divison with negative RI: First enter the formula, then calculate the Ri for each division. (Enter the amount in thousands. Use pareotheses of a minus siga for negative tesidual incomes) Interprel your results and offer recommendations for any division with negative R : meeting managements target rate of rotum The shouid work on inprowng its Improving this may help the division achiave posarve rosidual income. Requirement 6. Tolal asset data were providod in this problem If you wore to gather this information froms an annual report, how would you measure total assets? Describe your measurement choices and some of the pros and cons of those choices. Most companies use the asset balance since the income used in the ROI calculation is eaned over the year Most companies use the asset balance since the incorne used in the ROl calculation is eamed over the yoat Management must also decide whether they wish to use the gross book value of assets or the net book value of assets The book value is otten used because it is easily pulled from the balance sheet Howviver, Rol using that value will artifically rise over time due to Requirement7. Describe some of the factors that management considers when setting its minimum target rate of retum Requirement 8. Explain why some fims prefer to use Ri mather than ROl for performance moosurement RI does a batter job of Requiremmnt 9. Explain why budget versus actual performance reports ate insufficient for evaluating the performance of investment centers investrment centers are responsible for do not measure Budget yersus actual pefformance reports are insuificht bocause they
