Universal Electronics, Inc. (UEI), which started operations one year ago, has two divisIOn 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. ner and Commercial. Both divisions Consuner $54,000 10,650 35,500 4,200 4,200 Comnercial $85,000 11,925 39,750 4,000 4,200 Sales revenue Divisional inoone Diviaional investnent Current liabilities RAD Required: Evaluate the performance of the two divisions assuming UEl uses return on investment (ROI).
Universal Electronics, Inc. (UEI), which started operations one year ago, has two divisIOn 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. ner and Commercial. Both divisions Consuner $54,000 10,650 35,500 4,200 4,200 Comnercial $85,000 11,925 39,750 4,000 4,200 Sales revenue Divisional inoone Diviaional investnent Current liabilities RAD Required: Evaluate the performance of the two divisions assuming UEl uses return on investment (ROI).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Evaluate the performance of the two divisions assuming UEI uses return on investment (ROI).
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.
Consumer
$54,000
10,650
35,500
4,200
4,200
Comnercial
Sales revenue
Divisional income
$85,000
11,925
39,750
4,000
Divisional investment
Current liabilities
R&D
4,200
Required:
Evaluate the performance of the two divisions assuming UEI uses return on investment (ROI).
ROI of Consumer division
ROI of Commercial division
Which division performed better?
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