Homework Help Question & Answers

E10-10 Determining the Impact of Various Transactions on Investment Turnover, ROI, Residual Income, and Profit Margin [...

E10-10 Determining the Impact of Various Transactions on Investment Turnover, ROI, Residual Income, and Profit Margin [LO 10-

E10-10 Determining the Impact of Various Transactions on Investment Turnover, ROI, Residual Income, and Profit Margin [LO 10-4, 10-5 Poseldon Corporation manufactures a varlety of gear for water sports. Poseidon has three divisions: Leke, River, and Ocean. Each division is managed as an invesiment center. During the current year, the Ocean dhision experienced the following transactions: pedal order Was acepl se in ubentd Th pr otnl anriand ess canachy The selling price was in axcass of total variabla costs pics. The compeny axperianced a surge in sales during the summer months Salas retumed to thair normal level for tha ramainder of the vear g d Founment ring 5500 000 to 10 percent with no effect an the minimum required rate of rehurn m8 parce ne L The cemare i Required: n raturn on invasiment, rasidual incoma, and aconomic valua added Use tha table below to arganiza your answars Use ) for increasa, (D) for decrease. (N) for na effact, to datermine the impact of the transaction Each transaction should be treatad indapendantly impact Raturn on Residual Economic Transaction
0 0
Next > < Previous
ReportAnswer #1
ROI is net income expressed in relation to the amount invested
Residual income is net income over& above the investor's predetermined minimum required return.
EVA is the after-tax operating profits netted with the charges for usage of that operating capital or assets, ie. Operating assets*Cost of capital---to assess the efficiency of the investment's performance.
EVA=NOPAT-(Operating assets*Cost of capital)
Transacns ROI Res.Inc. EVA Reasons
a. Increase Increase Increase Revenues Increase
b. Increase Increase Increase Costs/Salary expense will decrease
c. Increase Increase Increase Increased sales revenues for part of the year
d. Decrease Decrease Decrease Capital asset has increased & also depreciation expense
e. Remains same Remains same Decrease Increase in cost of capital decreases EVA
f. Increase Increase Increase Tax expense will decrease.
Add Homework Help Answer
Add Answer of:
E10-10 Determining the Impact of Various Transactions on Investment Turnover, ROI, Residual Income, and Profit Margin [...
Your Answer: Your Name: What's your source?
Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Need Online Homework Help?
Ask a Question
Get FREE Expert Answers
WITHIN MINUTES