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It is the end of the third quarter, and Patricia is evaluating the performance of two key divisions in the company. Both divisions had $48.000 cash available for investment in the fourth quarter, so Patricia is now analyzing each division before a potential investment. She has gathered the following condensed income statements and selected information from the balance sheet for each division. The company's minimum required rate of return is 8%, whille its weighted average cost of capital is 8%. Its effective tax rate is 25% Sales COGS Gross margin Operating expenses Operating income Operating assets Total assets Current liabilities East $960,000 450,000 $510.000 478,000 $32,000 West $1,100,000 770,000 $330,000 298,000 $32,000 $800,000 $500,000 $1,200,000 $840,000 $160,000 $47,000

It is the end of the third quarter, and Patricia is evaluating the performance of two key divisions in the company. Both divisions had $48.000 cash available for investment in the fourth quarter, so Patricia is now analyzing each division before a potential investment. She has gathered the following condensed income statements and selected information from the balance sheet for each division. The company's minimum required rate of return is 8%, whille its weighted average cost of capital is 8%. Its effective tax rate is 25% Sales COGS Gross margin Operating expenses Operating income Operating assets Total assets Current liabilities East $960,000 450,000 $510.000 478,000 $32,000 West $1,100,000 770,000 $330,000 298,000 $32,000 $800,000 $500,000 $1,200,000 $840,000 $160,000 $47,000

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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It is the end of the third quarter, and Patricia is evaluating the performance of two key divisions in the company. Both divisions had $48.000 cash available for investment in the fourth quarter, so Patricia is now analyzing each division before a potential investment. She has gathered the following condensed income statements and selected information from the balance sheet for each division. The company's minimum required rate of return is 8%, while its weighted average cost of capital is 8%. Its effective tax rate is 25% Sales COGS Gross margin Operating expenses Operating income Operating assets Total assets Current liabilities East $960,000 450,000 $510,000 478,000 $32,000 West $1,100,000 770,000 $330,000 298,000 $32,000 $800,000 $500,000 $1,200,000 $840,000 $160,000 $47,000
Transcribed Image Text:It is the end of the third quarter, and Patricia is evaluating the performance of two key divisions in the company. Both divisions had $48.000 cash available for investment in the fourth quarter, so Patricia is now analyzing each division before a potential investment. She has gathered the following condensed income statements and selected information from the balance sheet for each division. The company's minimum required rate of return is 8%, while its weighted average cost of capital is 8%. Its effective tax rate is 25% Sales COGS Gross margin Operating expenses Operating income Operating assets Total assets Current liabilities East $960,000 450,000 $510,000 478,000 $32,000 West $1,100,000 770,000 $330,000 298,000 $32,000 $800,000 $500,000 $1,200,000 $840,000 $160,000 $47,000
(a) Calculate the current ROI, RI, and EVA for each division through the third quarter. For ROI purposes, operating assets are considered investments. (Enter ROI as a decimal, not as a percentage. Round ROI to 4 decimal places, e.g. 0.1526. Enter negative amounts with either a-sign eg.-15,000 or in parenthesis e.g. (15,000)) ROI RI EVA $ $ East eTextbook and Media Save for Later $ $ West Attempts: 0 of 3 used Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above.
Transcribed Image Text:(a) Calculate the current ROI, RI, and EVA for each division through the third quarter. For ROI purposes, operating assets are considered investments. (Enter ROI as a decimal, not as a percentage. Round ROI to 4 decimal places, e.g. 0.1526. Enter negative amounts with either a-sign eg.-15,000 or in parenthesis e.g. (15,000)) ROI RI EVA $ $ East eTextbook and Media Save for Later $ $ West Attempts: 0 of 3 used Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above.
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