Identify the following and show the formula for calculating each:
a. ROI
b. RI
c. EVA
a. ROI = Return on Investment
Formula:
ROI = Operating Income ÷ Assets Invested or Profit Margin × Asset Turnover or
(Operating Income ÷ Sales) × (Sales ÷ Assets Invested)
b. RI = Residual Income
Formula:
RI = Operating Income – (Desired ROI × Assets Invested)
c. EVA = Economic Value Added
Formula
EVA = After-Tax Operating Income – Cost of Capital in Dollars or After-Tax Operating Income – [Cost of Capital × (Total Assets – Current Liabilities)]
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Answer the following statement true (T) or false (F)
The negotiating strategy, focus on interests, not positions, calls for the negotiator to
A) quickly uncover the interests of the other side. B) stick to his or her demands until the last. C) find mutual interests with the other side. D) strive to satisfy his or her overall interests.
The quantity required of a dependent demand item is computed from the demand for the final products in which the item is used
Indicate whether the statement is true or false
Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:a.The budgeted selling price per unit is $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on credit. b.Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month. c.The ending finished goods inventory equals 30% of the following month's sales. d.The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $4.00 per pound. e.Regarding raw materials purchases, 40% are paid for in
the month of purchase and 60% in the following month. f.The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours. g.Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour. h.The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000. The estimated net operating income (loss) for February is closest to: A. $81,620 B. $41,000 C. $11,620 D. $29,640