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Dynamite limited is a private company where a financial performance evaluation is to take place. The management accounting department advised the management to use Return
Dynamite limited is a private company where a financial performance evaluation is to take place. The management accounting department advised the management to use Return on Investment to carry out the exercise. Table below provides the data for 2020 that could be used for the analysis Data items Cash Account receivable Prepaid Expense Inventory Plant Property Equipment Accumulated Depreciation Equipment Unearned Revenue Revenue Cost of Revenue Operating expenses: Salary expenses Supplies Expense Utilities Depreciation Expense Tax Interest Expenses Operating Assets for year 2019 S 14,500 8.560 7500 8.800 220.000 280.000 95,000 15,000 45,000 325,000 138,500 25.800 28.400 22.000 11,300 28% 16,200 $530,000 Show all your calculations REQUIRED 1. Calculate the operating profit (EBIT) for 2020 2. Calculate net income of the current year. 3. Calculate the Average Operating Assets 4. Calculate the ROI using the information on the table 5. Find ROI using the two component method [DuPont Analysis] 6. Explain why the two component method of calculating ROI is more useful. 7. What component has contributed the most in 2020 to the ROI of this company
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