XYZ Corporation, whose tax rate is 30%, has two operating divisions, the Mandaue division and the Balamban division, with the following financial data for the current year: Total Assets Current Liabilities Mandaue Division Balamban Division P475,000,000 P550,000,000 P140,000,000 P110,000,000 Operating Income P52,750,000 P60,000,000 The company has a weighted-average cost of capital of 9.12%. What is Economic Value Added (EVA) for the Mandaue Division? P1,872,000
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- The following results are available for Division X and Y:Division X Division YProfit before interest and tax P185 000 P172, 000Capital employed P1, 540, 000 P1, 650, 000The cost of capital is 10%.Calculate and comment on the performance of the departments based on:a. Return on capital employed (4 marks)b. Residual incomMesopotamian Materials Inc. (MMI) has two decentralized divisions (Ur and Babylon) that have decision making responsibility over the amount of resources invested in their divisions. Recent financial extracts for both divisions are presented below: Ur Babylon Fixed assets, gross $2,500 $4,000 Accumulated depreciation $1,500 $1,200 Other assets $500 $750 Liabilities $500 $1,000 Sales $6,750 $7,200 Net income after tax* $743 $1,008 Average age of fixed assets (years) 15 5 *Net income is after tax but before interest MMI's weighted average cost of capital (WACC) is 11.5%. The MMI measures division performance based on the book value of net assets. The producer price index 15 years ago was 100, 116 five years ago, and currently is 125. Which is true, when fixed asset costs are adjusted upward for inflation?Mesopotamian Materials Inc. (MMI) has two decentralized divisions (Ur and Babylon) that have decision making responsibility over the amount of resources invested in their divisions. Recent financial extracts for both divisions are presented below: Ur Babylon Fixed assets, gross $2,500 $4,000 Accumulated depreciation $1,500 $1,200 Other assets $500 $750 Liabilities $500 $1,000 Sales $6,750 $7,200 Net income after tax* $743 $1,008 Average age of fixed assets (years) 15 5 *Net income is after tax but before interest MMI's weighted average cost of capital (WACC) is 11.5%. The MMI measures division performance based on the book value of net assets. The producer price index 15 years ago was 100, 116 five years ago, and currently is 125. Which is true, when fixed asset costs are adjusted upward for inflation? Babylon's RONA is 35.8% Babylon's RONA is 26.3% Ur's depreciation expense increases by $19 more than…
- XYZ Inc. presented the following info regarding its two divisions classified as investment B Division Operating Income Operating assets A Division 300,000 1,200,000 500,000 2,500,000 2,750,0000 375,000 Net Sales 1,500,000 240,000 Current Liabilities WACC 15% 12.5% Current Operating Asset 500,000 750,0000 The corporation is subject to 35% tax rate. Weighted cost of capital is Based on book value of long-term asset. Assuming the imputed interest rate is 18%. REQUIREMENTS: 1. In using EVA, what is the EVA of the division that is performing better? 2. In using ROI, what is the ROI of the division that is performing better? 3. In using residual income, what is the residual income of the division that is performing better?|Your Corporation has two divisions: A Division and B Division. The corporation's net operating income is $31,800. The A Division's divisional segment margin is S111,800 and the B Division's divisional segment margin is $152,800. What is the amount of the common fixed expense not traceable to the individual divisions? O $121,000 O $232,800 O $ 80,000 O $296,400An entity and its divisions reported the following for the year 20xl: Sales to unaffiliated customers 38,000,000 15,000,000 Intersegment sales of products similar to those sold to unaffiliated customers Interest earned on loans to other operating segments 1,600,000 The entity and all of its divisions are engaged solely in manufacturing operations. To qualify as reportable segment, the segment revenue should at least be what amount?
- SquidGame Inc. presented the following information regarding its two divisions classified as investment centers. Operating Income Operating assets Net sales Jenny Division P 300,000 Johnny Division P500,000 2,500,000 1,200,000 1,500,000 240,000 2,750,000 Current Liabilities 375,000 WACC 15% 12.5% Current operating asset 500,000 750,000 The corporation is subject to a 35% tax rate. Weighted cost of capital is based on book value of long- term asset. Assuming the imputed interest rate is 18%. Required: 1. In using ROI, what is the ROI of the division that is performing better? 2. In using EVA, what is the EVA of the division that is performing better?Spartans Inc. has the following information for its two divisions: North and South North South Sales $6,000,000 $6,000,000 Expenses $3,800,000 $3,800,000 Oper. Income $2,200,000 $2,200,000 Taxes $660,000 $770,000 Taxable Inc. $1,540,000 $1,430,000 Invested Assets $13,000,000 $15,000,000 Spartans Inc. has a 10% hurdle rate. Calculate the following for each division: Return on Investment (ROI) North Division ________________ South…An entity and its divisions reported the following for the current year: Sales to unaffiliated customers 40,000,000 Intersegment sales of product similar to those sold to unaffiliated customers 12,000,000 Interest earned on loans to other operating segments 1,000,000 The entity and all of its divisions are engaged solely in manufacturing operations. To qualify as reportable segment, the segment revenue should at least be what amount? A. 5,300,000 B. 4,100,000 C. 5,200,000 D. 4,000,000
- The following data relates to the ABC Corporation and its A Division. A Division sales P 8,000,000 A Division operating income P 480,000 A Division total assets P 2,000,000 A Division current liabilities P 600,000 Corporate target rate of return 14% Corporate weighted average cost of capital 10% Corporate effective tax rate 30% What is the A Divisions Economic Value Added (EVA)?SquidGame Inc. presented the following information regarding its two divisions classified as investment centers. Jenny Division P 300,000 Operating Income Operating assets Net sales Johnny Division P500,000 2,500,000 2,750,000 375,000 1,200,000 1,500,000 Current Liabilities 240,000 WACC 15% 12.5% Current operating asset 500,000 750,000 The corporation is subject to a 35% tax rate. Weighted cost of capital is based on book value of long- term asset. Assuming the imputed interest rate is 18%. Required: 1. In using EVA, what is the EVA of the division that is performing better? 2. In using Residual Income, what is the residual income of the division that is performing better?he following information pertains to Sheffield Corp. and its divisions for the year ended December 31, 2021. Sales to unaffiliated customers $3960000 Intersegment sales of products similar to those sold to unaffiliated customers 910000 Interest earned on loans to other operating segments 60000 Sheffield and all of its divisions are engaged solely in manufacturing operations. Sheffield has a reportable segment if that segment's revenue exceeds $487000. $402000. $396000. $493000.