Problem 12-18 (Part Level Submission) Top management of the Gates Corporation is

Question

Problem 12-18 (Part Level Submission)

Top management of the Gates Corporation is trying to construct a performance evaluation system to use to evaluate each of its three divisions. This past year’s financial data are as follows:

a. How would the divisions be ranked if the evaluation were based on net income?

b.How would the divisions be ranked if the evaluation were based on ROI? (Round answers to 2 decimal places, e.g. 15.25%.)

c.  How would the divisions be ranked (from best to worst performance) if the evaluation were based on residual income? (Round calculations and final answer to 0 decimal places, e.g. 5,025.)

Residual Income Rank
Division A $ _________ _______
Division B $ _________ ________
Division C $ _________ ________

Division A Division B Division C Total assets $942,000 $18,710,000 $11,150,000 Noninterest-bearing current liabilities 50,700 2,160,000 1,067,000 Net income 197,000 1,818,000 1,343,000 Interest expense 50,700 1,934,000 1,248,000 Tax rate 40% 40% 40% Required rate of return 10% 12% 14%

Explanation / Answer

Answer:a

Answer:b

Answer:c

Particulars Net Income Ranking Division A 197000 III Division B 1818000 I Division C 1343000 II

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---