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Evaluate the performance of two divisions assuming UEI uses economic value added (EVA).

Evaluate the performance of two divisions assuming UEI uses economic value added (EVA).

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Evaluate the performance of two divisions assuming UEI uses economic value added (EVA).
Universal Electronics, Inc. (UEI), which started operations one year ago, has two divisions: Consumer and Commercial. Both divisions Invest heavily in R&D, which is assumed to benefit five years. R&D spending is made uniformly throughout the year. UEI has a cost of capital of 11 percent. Selected financial information for the two divisions (in thousands of dollars) for the year just completed follows. Сommercial $37,000 3,885 27,750 Consumer Sales revenue Divisional income Divisional investment Current liabilities $22,000 3,850 27,500 1,000 1,000 800 RAD 1,000 Required: Evaluate the performance of the two divisions assuming UEI uses economic value added (EVA). (Enter your answers in thousands of dollars rounded to 1 decimal place.) EVA of Consumer division EVA of Commercial division Which division performed better?
Transcribed Image Text:Universal Electronics, Inc. (UEI), which started operations one year ago, has two divisions: Consumer and Commercial. Both divisions Invest heavily in R&D, which is assumed to benefit five years. R&D spending is made uniformly throughout the year. UEI has a cost of capital of 11 percent. Selected financial information for the two divisions (in thousands of dollars) for the year just completed follows. Сommercial $37,000 3,885 27,750 Consumer Sales revenue Divisional income Divisional investment Current liabilities $22,000 3,850 27,500 1,000 1,000 800 RAD 1,000 Required: Evaluate the performance of the two divisions assuming UEI uses economic value added (EVA). (Enter your answers in thousands of dollars rounded to 1 decimal place.) EVA of Consumer division EVA of Commercial division Which division performed better?
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