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Tom and Jerry are both managers of sales teams at Flounder Corp., a furniture company whose most popular item is a tweed couch. Tom and
Tom and Jerry are both managers of sales teams at Flounder Corp., a furniture company whose most popular item is a tweed couch.
Tom and Jerry are very competitive and each attempt to outperform one another every year. Currently, Tom's department has better
metrics, which has resulted in larger bonuses for Tom and his team. Flounder Corp. evaluates both departments based upon each
team's respective return on investment and economic value added. The departments reported the following financial data during the
most recent year:
It should be noted that Flounder uses average operating assets as its definition of investment, and it has a minimum required rate of
return of and a tax rate of Flounder has used a variety of ways to acquire capital and has the current makeup: proportion
of equity is the equity rate is the proportion of debt is and the debt rate is Use this information to answer the
following questions.
a
b
What are the return on sales, investment turnover, and return on investment for each department? Note which department has
performed better for each calculation. Do not round intermediate calculations. Round answers to decimal places, eg or
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