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Quantify the Effects of Managerial Actions on ROPI and Components BCS Enterprises reports the following financial data just prior to its fiscal year ended June
Quantify the Effects of Managerial Actions on ROPI and Components BCS Enterprises reports the following financial data just prior to its fiscal year ended June 30, 2017 (\$ millions). a. Compute ROPI for FY2017 and FY2018. Net operating assets (NOA) at June 30, 2016 were \$6,750. Round answers to one decimal place, if applicable. b. The company is contemplating taking the following actions before the end of June 2017. (These actions are not reflected in any of the financial data reported above.) For each of the actions, determine the effect on residual operating income for the fiscal year ended June 30, 2018. 1. Reduce inventory by 10% which reduces accounts payable by 5%. 2. Decrease property, plant and equipment (PPE) by 20% with no consequent impact on NOPAT. 3. Engage in a sale leaseback of a major building. The company will sell 50% of its PPE at book value and increase rental costs by $150 after tax, per year. 4. Increase debt $1,500, which increases interest expense by $75. Round answers to one decimal place, if applicable
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