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Please answer the six accounting questions attached. The following data pertain to three divisions of Nevada Aggregates, Inc. The company's required rate of return on
Please answer the six accounting questions attached.
The following data pertain to three divisions of Nevada Aggregates, Inc. The company's required rate of return on in Division A Sales Revenue Income Average Investment Sales Margin Capitol Turnover ROI Residual income 1840000 20 % 1.00 Division B Division C 1840000 20 % 4.00 25 % 20 % 489000 quired rate of return on invested capital is 8 percent. (Round "Capital turnover" answers to 2 decimal place.) mal place.) The following data pertain to three divisions of Nevada Aggregates, Inc. The company's required rate of return on Division A Sales revenue Income ? $ $ 540,000 Average investment ? Sales margin Division B $ $ 40 % Capital turnover 3 ROI ? Residual income ? Required: 2. Suppose Division A's sales margin increased to 45 percent, while its capital turnover remained cons New return on investment % e company's required rate of return on invested capital is 8 percent. Division B Division C 11,000,000 ? 2,030,000 ? 2,510,000 ? ? ? ? ? 45 % ? 30 % $ 134,000 hile its capital turnover remained constant. Compute the division's new ROI. Megatronics Corporation, a massive retailer of electronic products, is organized in four separate divisions. The fo During the past week, management of the company's Northeast Division was approached about the possibility of Northeast Division $ 4,320,000 Sales Variable costs 75 Fixed costs $ 883,000 Invested capital $ 985,000 % of sales Management has determined that in order to upgrade the competitor to Megatronics' standards, an additional $1 Required: 1. Compute the current ROI of the Northeast Division and the division's ROI if the competitor is acquired. 2. If divisional management is being evaluated on the basis of ROI, will the Northeast Division likely pursue ac 3-a. Compute the ROI of the competitor as it is now and after the intended upgrade. 3-b. If ROI is used as the basis for evaluation, would Megatronics Corporation likely be in favor of the acquisit 4. Calculate the Northeast Division's ROI after acquisition of competitor but before upgrading. 5-a. Assume that Megatronics uses residual income to evaluate performance and desires a 12 percent minimu 5-b. If divisional management is being evaluated on the basis of residual income, will the Northeast Division lik Compute the current ROI of the Northeast Division and the division's ROI if the competitor is acquired. (Roun Current ROI ROI if competitior is acquired % % Compute the ROI of the competitor as it is now and after the intended upgrade. ROI before upgrading ROI after upgrading % % Calculate the Northeast Division's ROI after acquisition of competitor but before upgrading. (Round your answ ROI % Assume that Megatronics uses residual income to evaluate performance and desires a 12 percent minimum r Current residual income Residual income if competitor is acquired separate divisions. The four divisional managers are evaluated at year-end, and bonuses are awarded based on ROI. Last ed about the possibility of buying a competitor that had decided to redirect its retail activities. (If the competitor is acquired, n Competitor $ 2,720,000 70 $ 744,000 $ 300,000 % of sales andards, an additional $180,000 of invested capital would be needed. mpetitor is acquired. t Division likely pursue acquisition of the competitor? be in favor of the acquisition of the competitor? sires a 12 percent minimum return on invested capital. Compute the current residual income of the Northeast Division and t l the Northeast Division likely pursue acquisition of the competitor? petitor is acquired. (Round your answers to 2 decimal places (i.e., .1234 should be entered as 12.34).) rading. (Round your answer to 2 decimal place. (i.e., .1234 should be entered as 12.34).) a 12 percent minimum return on invested capital. Compute the current residual income of the Northeast Division and t arded based on ROI. Last year, the company as a whole produced a 15 percent return on its investment. he competitor is acquired, it will be acquired at its book value.) The data that follow relate to recent performance of the North e Northeast Division and the division's residual income if the competitor is acquired. e Northeast Division and the division's residual income if the competitor is acquired. erformance of the Northeast Division and the competitor: The following data pertain to British Isles Aggregates Company, a producer of sand, gravel, and ceme Sales revenue 6,200,000 Cost of goods sold 2,596,000 Operating expenses 3,232,000 Average invested capital 1,550,000 denotes the British pound sterling, the national monetary unit of Great Britain. Required: Compute the company's sales margin, capital turnover, and ROI. Sales margin Capital turnover ROI % % of sand, gravel, and cement, for the year just ended. The following data pertain to British Isles Aggregates Company, a producer of sand, gravel, and ceme Sales revenue 6,200,000 Cost of goods sold 2,596,000 Operating expenses 3,232,000 Average invested capital 1,550,000 denotes the British pound sterling, the national monetary unit of Great Britain. 2. If the sales and average invested capital remain the same during the next year, to what level would Total expenses must be reduced to and, gravel, and cement, for the year just ended. ar, to what level would total expenses have to be reduced in order to improve the firm's ROI to 30 percent? The following data pertain to British Isles Aggregates Company, a producer of sand, gravel, and ceme Sales revenue 6,200,000 Cost of goods sold 2,596,000 Operating expenses 3,232,000 Average invested capital 1,550,000 denotes the British pound sterling, the national monetary unit of Great Britain. 3-a. Assuming that the expenses and cost of goods sold are reduced in order to improve the firm's ROI to 30 p 3-b. Show how the new sales margin and the old capital turnover together result in a new ROI of 30 percent. Assuming that the expenses and cost of goods sold are reduced in order to improve the firm's ROI to 30 perc New sales margin % Show how the new sales margin and the old capital turnover together result in a new ROI of 30 percent. (Ent New ROI = % x f sand, gravel, and cement, for the year just ended. ove the firm's ROI to 30 percent, compute the firm's new sales margin. new ROI of 30 percent. he firm's ROI to 30 percent, compute the firm's new sales margin. (Round your answers to 2 decimal places (i.e., .1234 ROI of 30 percent. (Enter "new sales margin" as a percentage rounded to 2 decimal places (i.e., .1234 should be entere 30 % mal places (i.e., .1234 should be entered as 12.34).) .1234 should be entered as 12.34) and "old capital turnover" to two decimal places.)Step by Step Solution
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