12th Edition

ISBN: 9780134486444

Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura

Publisher: PEARSON

See similar textbooks

Videos

Textbook Question

Chapter 24, Problem P24.35BPGB

Using ROI and Rl to evaluate investment centers

Learning Objective 5

3. Consumer's asset turnover ratio 0.8202

Tiger Paints is a national paint manufacturer and retailer. The company is segmented into five divisions: Paint Stores (branded retail locations), Consumer (paint sold through home improvement stores), Automotive (sales to auto manufacturers), International, and Administration. The following is selected divisional information for its two largest divisions: Paint Stores and Consumer.

	Net Sales Revenue	OperatingIncome	Average Total Assets
Paint Stores	$ 4,000,000	$ 476,000	$ 1,420,000
Consumer	1,300,000	196,000	1,585,000

Management has specified a 19% target rate of return.

Requirements

Calculate each division's ROI. Round all of your answers to four decimal places.
Calculate each division's profit margin ratio. Interpret your results.
Calculate each division's asset turnover ratio. Interpret your results.
Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results.
Calculate each division's Rl. Interpret your results, and offer a recommendation for any division with negative Rl.
Describe some of the factors that management considers when setting its minimum target rate of return.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 24, Problem P24.34BPGB

Chapter 24, Problem P24.36BPGB

Students have asked these similar questions

Required information Use the following information for the Exercises below. [The following information applies to the questions displayed below.] Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center). Average Invested Assets Sales Income Electronics $63,460,000 $3,173,000 $16,700,000 Sporting goods 19,050,000 2,286,000 12,700,000 Investment Center Exercise 22-10 Computing return on investment and residual income; investing decision LO A1 1. Compute return on investment for each department. Using return on investment, which department is most efficient at using assets to generate returns for the company? 2. Assume a target income level of 12% of average invested assets. Compute residual income for each department. Which department generated the most residual income for the company? 3. Assume the Electronics department is presented with a new investment opportunity that will yield a 14% return on…

Question 5.1 For each of the following balanced scorecard measures, A – Financial B – Customer C – Internal Business Process D – Learning and Growth Required Match with the appropriate perspective: Number of new customers Percentage of defective product units Number of patents Customer profitability Customer cost per unit Return on assets Average job-related training hours per employee Product cost per unit Employee turnover rate Percentage of processes with real-time feedback

eBook Question Content Area Unique balanced scorecards Coulson and Company is a large retail business that has a firm-wide balanced scorecard. Recently, management has discussed the need for the balanced scorecard to be more relevant to each individual department of the company. Specifically, management wants to come up with unique scorecards for its Public Relations and Inventory Management departments. For both departments, management recognizes that properly and efficiently training employees is important. For these purposes, management gathers data on the median training hours per employee and new employee performance review ratings. For the Inventory Management Department, management is focused on reducing stockouts (running out of certain inventory items) and keeping accurate inventory counts. For these purposes, the company tracks the number of back orders and discrepancies between the physical and record counts of inventory, respectively. For the Public Relations…

Chapter 24 Solutions

Horngren's Accounting (12th Edition)

Ch. 24 - Prob. 1QC Ch. 24 - Which is not one of the potential advantages of...Ch. 24 - The Quaker Foods division of PepsiCo is most...Ch. 24 - Which of the following is not a goal of...Ch. 24 - Which of the following balanced scorecard...Ch. 24 - The performance evaluation of a cost center is...Ch. 24 - Prob. 7QC Ch. 24 - Prob. 8QC Ch. 24 - Prob. 9QC Ch. 24 - Prob. 10QC

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.