Please answer req 6-9!! will rate

Req6 drop down options:

1. a. Average b. beginning c. ending

2. a. gross b. net

3. a. acquisitions of property b. cash balance c. depreciation d. notes receivable e. prepaid expenses

Req7 drop down options (all options are the same for each drop down)

a. after-tax operating income b. assets less current liabilities amount c. competitors rate of return d. general economic conditions e. interest rates on the company debt f. investors expectations g. minimum rate of return required by investors h. risk level of division's business i. return being earned by other divisions.

Req8 drop down options

a. focusing on stockholders' and creditors rate of return b. getting management to make sure their division is profitable c. goal congruence d. increasing the return on investment.

Req9 drop down options

1. a. both generating profit and efficiently managing a division's asset b. efficiently managing a division's assets c. generating profit

2. a. how efficiently the division uses its assets b. how much income the division generated

Sherwin-Williams is a national paint manufacturer and retailer. BE: (Click the icon to view additional information.) Assume that management has specified a 21% target rate of return. Read the requirements. Requirement 1. Calculate each division's ROI. First enter the formula, then calculate the ROI for each division. (Enter the ROI as a percent rounded to the nearest hundredth of a percentage, X.XX%.) Operating income Total assets + Data Table ROI Paint Stores 574200 1320000 = 43.50 % Consumer 195300 1750000 11.16 % Requirement 2. Calculate each division's sales margin. Interpret your results. The company is segmented into five divisions: Paint Stores (branded retail location), Consumer (paint sold through stores such as Sears, Home Depot, and Lowe's), Automotive (sales to auto manufacturers), International, and Administration. The following is selected hypothetical divisional information for the company's two largest divisions: Paint Stores and Consumer (in thousands of dollars). Enter the formula, then calculate the sales margin for each division. (Enter the sales margin as a percent rounded to the nearest hundredth of a percentage, X.XX%.) Operating income - Sales = Sales margin 14.5 % Paint Stores 574200 3960000 Total Assets Consumer 1,200,000 195300 16.28 % Sales Operating Income Paint Stores ... $ 3,960,000 $ 574,200 Consumer ..... $ 1,260,000 $ 195,300 $ 1,320,000 Interpret your results. $ 1,750,000 The Consumer Division is more profitable on each dollar of sales. Print Done Requirement 3. Calculate each division's capital turnover. Interpret your results. First enter the formula, then calculate the capital turnover for each division. (Round to two decimal places.) Sales Total assets = Capital turnover Paint Stores 3960000 1320000 300 times Consumer 1260000 - 1750000 72 times The Paint Stores Division is more efficient in generating sales with its assets. Requirement 4. Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results. First enter the expanded ROI formula, then calculate the ROI for each division. (Enter the ROI as a percent rounded to the nearest hundredth of a percentage, X.XX%.) Sales margin Capital turnover ROI Paint Stores 14.5 % X 300 43.50 % Consumer 16.28 % X 72 = 11.72 % the The Consumer Division's profitability on each dollar of sales is higher than the Paint Stores Division's profitability. However, the Paint Store Division's efficiency is significantly higher than the Consumer Division's efficiency. These results cause the Paint Stores Division's ROI to be higher than Consumer Division's ROI. Requirement 5. Calculate each division's RI. Interpret your results and offer recommendations for any division with negative RI. First enter the formula, then calculate the RI for each division. (Enter the amount in thousands. Use parentheses or a minus sign for negative residual incomes.) Operating income Total assets X Target rate of return RI Paint Stores 574200 1320000 X 21 %) 297000 Consumer 195300 1750000 X 21 %) = -172200 Interpret your results and offer recommendations for any division with negative RI. Only the Paint Stores Division is meeting management's target rate of return. The Consumer Division should work on improving its capital turnover rate . Improving this may help the division achieve positive residual income. Requirement 6. Total asset data were provided in this problem. If you were to gather this information from an annual report, how would you measure total assets? Describe your measurement choices and some of the pros and cons of those choices. Most companies use the asset balance since the income used in the ROI calculation is earned over the year. Management must also decide whether they wish to use the gross book value of assets or the net book value of assets. The V book value is often used because it is easily pulled from the balance sheet. However, Rol using that value will artificially rise over time due to Requirement 7. Describe some of the factors that management considers when setting its minimum target rate of return. Requirement 8. Explain why some firms prefer to use RI rather than ROI for performance measurement. RI does a better job of Requirement 9. Explain why budget versus actual performance reports are insufficient for evaluating the performance of investment centers. Investment centers are responsible for Budget versus actual performance reports are insufficient because they do not measure