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ROI, Residual Income, and EVA with Different Bases Paradyme Company has a target return on capital of 12 percent. The following financial information is available
ROI, Residual Income, and EVA with Different Bases
Paradyme Company has a target return on capital of 12 percent. The following financial information is available for October:
|
|
| Software |
| Consulting |
| Venture capital |
|
| Book | Current | Book | Current | Book | Current |
| Sales | $100,000 | $100,000 | $200,000 | $200,000 | $800,000 | $800,000 |
| Income | 12,000 | 10,000 | 16,000 | 17,000 | 50,000 | 52,000 |
| Assets | 60,000 | 80,000 | 90,000 | 100,000 | 600,000 | 580,000 |
| Liabilities | 10,000 | 10,000 | 14,000 | 14,000 | 40,000 | 40,000 |
- Compute the return on investment using both book and current values for each division.
- Compute the residual income for both book and current values for each division
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