Question
Mary's Auto Shop Inc. allows its divisions to operate as autonomous units. Their results for the current year were as follows: Sport Terrain City Revenues
Mary's Auto Shop Inc. allows its divisions to operate as autonomous units. Their results for the current year were as follows:
Sport
Terrain
City
Revenues
$1,700,000
$800,000
$6,000,000
Current assets
230,000
40,000
410,000
Capital assets
870,000
660,000
1,590,000
Current liabilities
100,000
100,000
500,000
Net operating income
240,000
50,000
610,000
After-tax income
188,400
36,400
484,400
Weighted average cost of capital
10%
10%
10%
For each division compute (to two decimal) the:
1.Return on sales in %
2.Return on investment (to two decimal) based on total assets employed in %
3.Economic value added
4.Residual income based on net operating income
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