tion (in thousands of dollars) for the first year of business follows: revenue e ional assets (beginning of year) mt liabilities (beginning of year) expendituresa Carolinas $ 1,100 190 1,000 190 550 Northeast $ 4,600 312 1,500 190 470 assumed to benefit two periods. All R&D is spent at the beginning of the year
tion (in thousands of dollars) for the first year of business follows: revenue e ional assets (beginning of year) mt liabilities (beginning of year) expendituresa Carolinas $ 1,100 190 1,000 190 550 Northeast $ 4,600 312 1,500 190 470 assumed to benefit two periods. All R&D is spent at the beginning of the year
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Exercise 14-33 (Algo) Comparing Business Units Using ROI (LO 14-2)
Lasky Manufacturing has two divisions: Carolinas and Northeast. Lasky has a cost of capital of 7.5 percent. Selected financial
information (in thousands of dollars) for the first year of business follows:
Sales revenue
Income
Complete this question by entering your answers in the tabs below.
Req A1
Divisional assets (beginning of year)
Current liabilities (beginning of year)
R&D expendituresa
aR&D is assumed to benefit two periods. All R&D is spent at the beginning of the year.
Required:
a-1. Evaluate the performance of the two divisions assuming Lasky uses return on investment (ROI).
a-2. Which division had the better performance?
Divisions
Req A2
Carolinas
Northeast
Carolinas
$ 1,100
190
1,000
190
550
Evaluate the performance of the two divisions assuming Lasky uses return on investment (ROI).
Note: Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).
ROI
%
%
Northeast
$4,600
< Req A1
312
1,500
190
470
Req A2 >
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