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xenn [34]
3 years ago
11

Campbell Home Maintenance Company earned operating income of $6,821,100 on operating assets of $58,300,000 during Year 2. The Tr

ee Cutting Division earned $1,174,670 on operating assets of $6,790,000. Campbell has offered the Tree Cutting Division $2,170,000 of additional operating assets. The manager of the Tree Cutting Division believes he could use the additional assets to generate operating income amounting to $434,000. Campbell has a desired return on investment (ROI) of 9.70 percent. Required Calculate the return on investment for Campbell, the Tree Cutting Division, and the additional investment opportunity. Calculate the residual income for Campbell, the Tree Cutting Division, and the additional investment opportunity.
Business
1 answer:
ASHA 777 [7]3 years ago
6 0

Answer:

1.

Return on investment = operating income divided by operating Assets

A. Return on investment on Campbell business = $6,821,100 / $58,300,000 x 100%

= 11.7%

B. Return on investment on Tree cutting business = $1,174,670 / $6,790,000 x 100%

= 17.3%

C. Return on new investment on tree cutting business :

i. Only new investment = $434,000 / $2,170,000 x 100%

= 20%

ii. Total new investment = $1,608,670 / $8,960,000

= 18%

2.

Residual income = controllable Margin - (required return % x average operating assets)

Residual income on Campbell business = $6,821,100 - (9.70% x $58,300,000)

= $1,166,000

B. Residual income on Tree cutting business = $1,174,670 - (9.70% x $6,790,000)

= $516,040

C. Residual income on tree cutting business :

i. Only new investment = $434,000 - (9.70% x $2,170,000)

= $223,510

ii. Total new investment = $1,608,670 - (9.70% x $8,960,000)

= $739,550

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padilas [110]

It is an advantage when group incentives encourage competition between groups of employees when groups try to outdo one another in satisfying customers.

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Competition, most commonly viewed as the interaction of individuals competing for a finite common resource, is the direct or indirect interaction of organisms that results in changes in fitness when they share the same resource. can be defined more broadly as a dynamic interaction.

There are four kinds of competition in a loose marketplace machine: perfect opposition, monopolistic competition, oligopoly, and monopoly.

The four key characteristics of perfect competition are: (1) a huge wide variety of small companies, (2) equal merchandise offered by all firms, (three) perfect resource mobility or the liberty of entry into and go out out of the enterprise, and (4) perfect information of costs and generation.

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5 0
1 year ago
Read 2 more answers
You have been provided with the following summarized accounts of Golden Times Ltd. For the year ended 31 March 2000:
daser333 [38]

The computation of the following financial ratios for Golden Times Ltd is as follows:

<h3>(i) Return on capital employed:</h3>

= Profit after tax/Total assets - current liabilities x 100

= 12.44% (Sh 224,000/ Sh 1,800,000) x 100

<h3>(ii) The profit margin:</h3>

= Profit after tax/Sales revenue x 100

= 5.6% (Sh 224,000/Sh 4,000,000 x 100)

<h3>(iii) The turnover of capital:</h3>

= Sales Revenue/Equity

= 2.86 x (Sh 4,000,000/Sh 1,400,000

<h3>(iv) Current ratio:</h3>

= Current Assets/Current Liabilities

= 1.09 (Sh 1,520,000/Sh 1,400,000)

<h3>(v) Liquid ratio:</h3>

= Current Assets less Stocks /Current Liabilities

= 0.37 (Sh 1,520,000 - Sh 1,000,000/Sh 1,400,000)

<h3>(vi) Number of days accounts receivable are outstanding:</h3>

= Average Accounts Receivable/Sales Revenue x 365

= (Sh. 400,000/Sh. 4,000,000 x 365

= 36.5 days

<h3>(vii) Proprietary ratio:</h3>

= Shareholders equity/Total assets x 100

= 43.75% (Sh. 1,400,000/Sh. 3,200,000)

<h3>(viii) Stock turnover ratio:</h3>

= Cost of goods sold / Average stock

= 2.11 x (Sh. 3,000,000/Sh. 1,420,000)

<h3>(ix) Dividend yield ratio:</h3>

= Dividend per share/Price per share

= 5.36% (Sh. 0.268/Sh.5 x 100)

<h3>(x) Price earnings ratio:</h3>

= Market price per share/Earnings per share

= 8.93x (Sh. 5/Sh. 0.56)

<h3>Data and Calculations:</h3>

Golden Times Ltd

<h3>Balance sheet</h3>

As at 31 March 2000

                                                              Sh.               Sh.                  Sh.

Fixed Assets:

Freehold property (Net Book Value)                                          480,000

Plant and machinery (Net Book Value)                                      800,000

Motor Vehicle (Net Book Value)                                                 200,000

Furniture and fittings (Net Book Value)                                     200,000

                                                                                                  1,680,000

Current Assets:

Stocks                                                                1,000,000

Debtors                                                                400,000

Investments                                                          120,000

                                                                          1,520,000

Current Liabilities:

Trade creditors                            338,400

Bank overdraft                            878,400

Corporation tax                           176,000

Dividends payable                      107,200      1,400,000         120,000

                                                                                               1,800,000

Financed by:

Authorized share capital – 800,000

Sh. 1 ordinary shares

Issued and fully paid: 400,000 Sh.1                                      400,000

Ordinary shares

Capital reserve                                                                      200,000

Revenue reserve                                                                   800,000

Loan capital: 400,000 10% Sh. 1 Debentures                     400,000

                                                                                            1,800,000

Golden Times Ltd

<h3>Profit and loss account</h3>

For the year ended 31 March 2000

                                                                                          Sh.

Sales (credit)                                                                 4,000,000

Profit after charging all expenses except interest on  440,000

debentures

Less: Debenture interest                                                (40,000)

Profit before tax                                                             400,000

Corporation tax                                                               176,000

Profit after tax                                                                224,000

Less: Ordinary dividend proposed                              (107,200)

Retained profit transferred to revenue reserve           116,800

Beginning stock = Sh. 1,840,000 (Sh. 3,000,000 + 1,000,000 - 2,160,000)

Average stock = Sh. 1,420,000 (Sh. 1840,000 + Sh. 1,000,000)/2

Dividend per share = Sh. 0.268 (Sh 107,200/400,000)

Earnings per share = Sh. 0.56 (Sh. 224,000/400,000)

Learn more about financial ratios at brainly.com/question/17014465

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7 0
1 year ago
In eight years, when he is discharged from the Air Force, Steve wants to buy a $30,000 power boat. Click here to view Exhibit 12
IceJOKER [234]

Answer:

The correct answer is:

(1) $15,054

(2) $12,990

Explanation:

The required table is not given in the question. Please find below the attachment of the table.

Given:

Future value,

= $30,000

If discounting rate is 9%, the present value will be:

= Future \ value\times PV \ factor(9 \ percent, 8 \ years)

= 30000\times (\frac{1}{1.09} )^8

= 30000\times 0.5018

= 15,054 ($)

If discounting rate is 11%, the present value will be:

= Future \ value\times PV \ factor(11 \ percent, 8 \ years)

= 30000\times (\frac{1}{1.11} )^6

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According to Adam Smith, why do people work hard?
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Answer:

Money

Explanation:

they need money because to live in a house get a car,food etec

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For make - or - buy decisons, a supplliers ability to maintain secrecy of intellectual property is considered a?
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