bn Kelfour Enterprises has divided its operations into two divisions. Relevant accounting data for each division is as follows:OperatingIncomeDivisionsWestern DivisionEastern DivisionSales$ 150,000$ 300,000OperatingAssets$ 100,000$ 150,000$ 15,000$ 16,500Kelfour has an additional $50,000 of funds to invest. The manager of the Western Division believes that she can invest the fundsat a rate of return (ROI) of 14% while the manager of the Eastern Division has found a new investment opportunity that is expectedto yield a 12% ROI. Currently Kelfour uses ROI as the sole measure of managerial performance. Based on this informationMultiple ChoiceThe manager of the Western division is likely to reject an offer to have the funds invested her department.The manager of the Eastern division is likely to accept an offer to have the funds invested his department.The CEO of Kelfour is likely to favor having the funds invested in the Western Division.All of the answers represent true statements.

Answered: Kelfour Enterprises has divided its…

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 4CP: The Commercial Division of Tidewater Inc. provided the following information on its cash flow from...

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Augustus Electrical Company has 2 divisions, one in Georgetown and one in Berbice Guyana and information on the both divisions are as follows: Georgetown Berbice Total assets $100,000 $500,000 Current liabilities 25,000 150,000 Revenue 50,000 50,000 Income before tax 20,000 75,000 Required: Calculate the return on investment (ROI) using net income and total assets as the measure of income and investment for the Berbice division. a.150% b.1.5% c.15% d.20%
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Use the following information for the Problems below: The following data pertain to three divisions of Nevada Aggregates, Incorporated. The company's required rate of return on invested capital is 8 percent. Division A Division B Division C $ Sales revenue ? ? 12,000,000 $ $ Income Average investment ? 450,000 2,190,000 $ ? ? 2,700,000 Sales margin 40% ? 45% Capital turnover 2 ? ? ROI ? ? 20% $ Residual income ? ? 133,000 PR 13-37 (Algo) ROI and Residual Income; Missing Data (LO 13-2) Required: The following data pertain to three divisions of Nevada Aggregates, Incorporated. The company's required rate of return on invested capital is 6 percent. Note: Round "Capital turnover" answers to 2 decimal places. Division A Division B Division C Sales revenue $ 40,800,000 Income $ 1,710,000 $ 8,160,000 Average investment 10,200,000 Sales margin 18 % 1.00 % 20% Capital turnover ROI Residual income % % 18 % $ 501,000
Required information Use the following information for the Problems below: The following data pertain to three divisions of Nevada Aggregates, Incorporated. The company's required rate o on invested capital is 8 percent. Sales revenue Income Average investment Sales margin Capital turnover ROI Residual income Sales revenue Income Average investment Sales margin Capital turnover ROI Residual income Division A ? $ 440,000 ? 40% 2 ? ? Division A $ 8,150,000 $ 1,630,000 $ 8,150,000 20 % 1.00 $ 978,000 20% Required: The following data pertain to three divisions of Nevada Aggregates, Incorporated. The company's required rate of return capital is 8 percent. Note: Round "Capital turnover" answers to 2 decimal places. $ $ $ Division B $ 10,000,000 $ 2,160,000 $ 2,600,000 $ Division B 40,300,000 8,866,000 10,075,000 22 % 4.00 88 % ? ? ? 8,060,000 Division C ? $ ? ? 45% ? 40% $ 139,000 Division C 25 % 20 % 471,000
The Custodial Division of Clark's Corporate Services (CCS) has assets of $1.2 million. During the past year, the division had profits of $228,000. CCS has a cost of capital of 7.5 percent. Ignore taxes. Required: a. Compute the divisional ROI for the Custodial Division. b. Compute the divisional RI for the Custodial Division. Complete this question by entering your answers in the tabs below. Required A Required B Compute the divisional ROI for the Custodial Division. Divisional ROI % Required A Required B >
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Stuart Technologies, Inc. has three divisions. Stuart has a desired rate of return of 11.0 percent. The operating assets and income for each division are as follows: Operating Operating Divisions Assets Income $ 690,000 960,000 $110,400 100,800 68,340 Printer Сopier Fax 510,000 Total $2,160,000 $279,540 Stuart headquarters has $135,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROls: Expected ROIS for Additional Investments Divisions Printer 12.5% Сopier 11.5% Fax 10.5% Required a-1. Calculate the ROI for each division. a-2. Which division manager is currently producing the highest ROI? b. Based on ROI, which division manager would be most eager to accept the $135,000 of investment funds? c. Based on ROI, which division manager would be least likely to accept the $135,000 of investment funds? d. Which division offers the best investment opportunity for Stuart? g. Calculate…
INVESTMENT CENTER: The AAA Division has permanent current assets of P50,000 and operating non-current assets of 350,000. It provides annual operating income after tax of P100,000. Its cost of capital is 15% but the minimum required rate of return by the entity is 16%. How much is its current return on investment? How much is its economic value added? How much is its residual income? Assume that the Senna Division is presented by the head office to manage a P60,000 investment option yielding a 20% return on its investment. Should the Division agree to manage this investment opportunity? Yes, because the ROI will increase. Yes, because the RI and EVA will increase. No, because the ROI will decrease. No, because the RI and EVA will decrease.
Benson Technologies, Inc. has three divisions. Benson has a desired rate of return of 12.5 percent. The operating assets and income for each division are as follows: Operating Operating Divisions Assets Income $ 570,000 840,000 390,000 $ 98,610 98,280 56,940 Printer Сopier Fax Total $1,800,000 $253,830 Benson headquarters has $123,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROls: Expected ROIS for Additional Investments Divisions Printer 14.0% Copier 13.0% Fax 12.0% Required a-1. Calculate the ROI for each division. a-2. Which division manager is currently producing the highest ROI? b. Based on ROI, which division manager would be most eager to accept the $123,000 of investment funds? c. Based on ROI, which division manager would be least likely to accept the $123,000 of investment funds? d. Which division offers the best investment opportunity for Benson? g. Calculate…

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