Question
Household Brands Inc. (HBI) manufactures household goods in the United States. The company made two acquisitions in previous years to diversify their product lines. In
Household Brands Inc. (HBI) manufactures household goods in the United States. The company made two acquisitions in previous years to diversify their product lines. In 2011, HBI acquired cosmetics and consumer electronics companies. HBI is now, in 2020, comprised of three divisions: cosmetics, household, and consumer electronics. The following information (in thousands of dollars) presents operating revenues, operating income, and invested assets of the company over the last three years: Revenue Operating Income Assets Cosmetics 2018 $ 26,400 $ 1,800 $ 10,100 2019 20,800 1,600 9,800 2020 22,100 1,300 9,000 Household 2018 16,600 900 7,210 2019 15,000 900 8,000 2020 10,100 870 6,080 Electronics 2018 12,100 1,400 4,660 2019 9,420 1,200 4,330 2020 8,980 800 4,190 Household Brands Total 2018 55,100 4,100 21,970 2019 45,220 3,700 22,130 2020 41,180 2,970 19,270 The current compensation package is an annual bonus award. The senior executives share in the bonus pool. The pool is calculated as 20% of the annual residual income of the company. The residual income is defined as operating income minus a cost of capital charge of 15% of invested assets. Round all calculations to two significant digits. Asset turnover in the electronics division in 2020 is (rounded): Group of answer choices 0.85 2.14 2.43 1.94
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