The Cardstock Manufacturing Division of the Pulp Paper Company reported the following results from the past year. Shareholders require a return of 8%. The company's corporate tax rate is 40%. Sales $800,000 240,000 Operating income Total assets $1,100,000 Current liabilities 500,000 What is the division's capital turnover? OA. 2.20 OB. 3.33 OC. 0.73 OD. 4.58

The Cardstock Manufacturing Division of the Pulp Paper Company reported the following results from the past year. Shareholders require a return of 8%. The company's corporate tax rate is 40%. Sales $800,000 240,000 Operating income Total assets $1,100,000 Current liabilities 500,000 What is the division's capital turnover? OA. 2.20 OB. 3.33 OC. 0.73 OD. 4.58

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 3PA: Macon Mills is a division of Bolin Products. Inc. During the most recent year, Macon had a net...

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Macon Mills is a division of Bolin Products. Inc. During the most recent year, Macon had a net income of $40 million. Included in the income was interest expense of $2,800,000. The companys tax rate was 40%. Total assets were $470 million, current liabilities were $104,000,000, and $72,000,000 of the current liabilities are noninterest bearing. What are the invested capital and ROI for Macon?
Xenold, Inc., manufactures and sells cooktops and ovens through three divisions: Home, Restaurant, and Specialty. Each division is evaluated as a profit center. Data for each division for last year are as follows (numbers in thousands): The income tax rate for Xenold, Inc., is 40 percent. Xenold, Inc., has two sources of financing: bonds paying 5 percent interest, which account for 25 percent of total investment, and equity accounting for the remaining 75 percent of total investment. Xenold, Inc., has been in business for over 15 years and is considered a relatively stable stock, despite its link to the cyclical construction industry. As a result, Xenold stock has an opportunity cost of 5 percent over the 4 percent long-term government bond rate. Xenolds total capital employed is 5.04 million (2,600,000 for the Home Division, 1,700,000 for the Restaurant Division, and the remainder for the Specialty Division). Required: 1. Prepare a segmented income statement for Xenold, Inc., for last year. 2. Calculate Xenolds weighted average cost of capital. (Round to four significant digits.) 3. Calculate EVA for each division and for Xenold, Inc. 4. Comment on the performance of each of the divisions.
The Rainy Division of Seattle Corporation reported the following results from the past year. Shareholders require a return of 14%. Management calculated a weighted average cost of capital (WACC) of 5%. Rainy's corporate tax rate is 30%. $900,000 Sales 315,000 1,700,000 700,000 Operating income Total assets Current liabilities What is the division's Residual Income (RI)? O A. $189,000 O B. $77,000 O C. $315,000 O D. $126,000
Assume the Hiking Shoes division of the Simply Shoes Company had the following results last year (in thousands). Management's target rate of return is 10% and the weighted average cost of capital is 30%. Its effective tax rate is 40%. Sales Operating income Total assets Current liabilities What is the division's Residual Income (RI)? OA. $100,000 O B. $4,400,000 Ⓒ C. $700,000 O D. $280,000 $11,000,000 1,100,000 4,000,000 780,000
The Rainy Division of Seattle Corporation reported the following results from the past year. Shareholders require a return of 11% Management calculated a weighted-average cost of capital (WACC) of 2%. Rainy's corporate tax rate is 30 %. Sales $900.000 Operating income $225,000 Total assets $1,700,000 Current liabilities $800,000 What is the division's Residual Income (RI)?
Assume the Hiking Shoes division of the Simply Shoes Company had the following results last year (in thousands). Management's target rate of return is 30% and the weighted average cost of capital is 10%. Its effective tax rate is 30%. Sales Operating income Total assets Current liabilities What is the division's capital turnover? O A. 1.11 O B. 6 O C. 6.67 O D. 1.33 $6,000,000 900,000 1,000,000 750,000 (…)
The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year. Shareholders require a return of 9%. Management calculated a weighted average cost of capital (WACC) of 3%. Allied's corporate tax rate is 30%. $700,000 105,000 Sales Operating income Total assets 1,600,000 400,000 Current liabilities What is the division's Return on Investment (ROI)? O A. 57.14% O B. 43.75% O C. 6.56% O D. 15.00%
Assume the Hiking Shoes division of the All About Shoes Corporation had the following results last year (in thousands). Management's target rate of return is 30% and the weighted average cost of capital is 5%. Its effective tax rate is 30%. $14,000,000 2,800,000 1,500,000 Sales Operating income Total assets Current liabilities 840,000 What is the division's capital turnover? O A. 0.54 B. 5.00 C. 1.79 D. 9.33
The Holmes Division recorded operating data as follows for the past year: Sales Operating Income Average Operating Assets Shareholders' Equity Residual Income $200,000 $ 25,000 $100,000 $ 80,000 $ 13,000 For the past year, what was the minimum required rate of return? A) B) C) D) 12%. 11%. 14%. 13%.
Assume the Hiking Shoes division of the All About Shoes Corporation had the following results last year (in thousands). Management's target rate of return is 30% and the weighted average cost of capital is 5%. Its effective tax rate is 35%. Sales $14,000,000 Operating income 3,500,000 Total assets 2,000,000 Current liabilities 770,000 What is the division's sales margin? O A. 175.00% O B. 25.00% O C. 38.50% O D. 700.00%
Assume the Hiking Shoes division of the All About Shoes Corporation had the following results last year (in thousands). Management's target rate of return is 30% and the weighted average cost of capital is 5%. Its effective tax rate is 35%. Sales $14,000,000 Operating income Total assets 3,500,000 2,000,000 770,000 Current liabilities What is the division's sales margin? O A. 175.00% B. 25.00% OC. 38.50% O D. 700.00%
The following data pertain to Waramutse's most recent year of operations. Income $ 12,500,000 Sales revenue 220,000,000 Average invested capital 51,000,000 Assume that the company’s minimum desired rate of return on invested capital is 11 percent. Required: Compute Waramutse’s residual income for the year