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Outdoor Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into
Outdoor Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two division based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year (Click the icon to view the divisional information.) Compute each division's EVA. Interpret your results. First, enter the formula, and then calculate each divisions EVA Snow After-tax operating income - 946000 4,400,000 Total assets Current liabilities )x $ 420,000 )x WACC 1- 11 % 1- EVA 633820 (Click the icon to view the divisional information.) Compute each division's EVA. Interpret your results. First, enter the formu After-t Snow Divisional information Operating Total Current Sales Income Assets Liabilities Snow Sports $ 5,200,000 $ 946,000 $ 4,400,000 $ 420,000 Non-Snow Sports 8,100,000 1,518,000 6,600,000 720,000 Outdoor Sports management has specified a target 17% rate of return. The company's weighted average cost of capital (WACC) is 11%, and its effective tax rate is 33%. Print Done 820
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