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EXAMPLE 2 ROI Alitalia limited is a private company which is trying to evaluate the financial performance of the company. The management accounting department advised
EXAMPLE 2 ROI Alitalia limited is a private company which is trying to evaluate the financial performance of the company. The management accounting department advised the management to use Return on Investment to carry out the exercise. Table below provides the data that could be used for the analysis Data items $ Cash 2,500 Account receivable 17,560 Inventory 20,800 Plant 110,000 Property 75,000 Equipment 45,000 Accumulated Depreciation- Equipment 32,000 Sales 280,000 Cogs 110,000 Operating expenses 50,000 Unearned Revenue 35,300 Accrued expense 10,000 Tax 18% Operating Assets of last year $250.000 REQUIRED 1. Calculate the operating profit (EBIT) of the current year. 2. Calculate the operating assets of the current year. 3. Calculate the Average Operating Assets 4. Calculate the ROI using the information on the table 5. Find ROI using the two component method
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