Further evaluation of the financial statements shows current liabilities of 105M in 2020, 102M in 2019, and 133M in 2018.

In the footnotes to the financial statements, Porsche indicates that R&D expenditures have been relatively stable in recent time periods. Porsche also follows IFRS rules whereby research costs are expensed as incurred and development costs are capitalized and amortized over lifespans of 2-15 years. As a result, you have concluded that no adjustments to either income or assets related to R&D are necessary to complete EVA calculations.

Also included here is a KPMG.DE study of cost of capital (WACC), by industry. 312 firms primarily from Switzerland, Austria, and Germany were included in the study.

NOTE: we can use the automotive industry average 8.1% WACC for all RI and EVA.

Required

1.Compute return on investment (ROI) using the DuPont formula, residual income (RI), and economic value added (EVA) for 2019 and 2020.

2.Comment on the results. Was Porsche's 2020 financial performance better, worse, or about the same as 2019?