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Requirement 1. Calculate each division's ROI. First enter the formula, then calculate the ROI for each division. (Enter the ROI as a percent rounded to the nearest hundredth of a percentage, X.XXX%.) ROI % Paint Stores % Consumer Requirement 2. Calculate each division's sales margin. Interpret your results. Enter the formula, then calculate the sales margin for each division. (Enter the sales margin as a percent rounded to the nearest hundredth of a percentage, XXX%). Sales margin = % Paint Stores - Consumer Interpret your results. %
WE rar on ta For n agir ossible - Xt(s) possible Requirements Round all calculations to two decimal places. 1. Calculate each division's ROI. 2. Calculate each division's sales margin. Interpret your results. 3. Calculate each division's capital turnover. Interpret your results. 4. Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results. 5. Calculate each division's RI. Interpret your results and offer recommendations for any division with negative RI. 6. Total asset data were provided in this problem. If you were to gather this information from an annual report, how would you measure total assets? Describe your measurement choices and some of the pros and cons of those choices. 7. Describe some of the factors that management considers when setting its minimum target rate of return. 8. Explain why some firms prefer to use RI rather than ROI for performance measurement. 9. Explain why budget versus actual performance reports are insufficient for evaluating the performance of investment centers. Su
% Consumer Interpret your results. The Division is more profitable on each dollar of sales. Requirement 3. Calculate each division's capital turnover. Interpret your results. First enter the formula, then calculate the capital turnover for each division. (Round to two decimal places.) = Capital turnover times Paint Stores times Consumer The Division is more efficient in generating sales with its assets. Requirement 4. Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results.
Requirement 4. Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results First enter the expanded ROI formula, then calculate the ROI for each division. (Enter the ROI as a percent rounded to the nearest hundredth of a percentage, XXX%) RO . Paint Stores Consumer . The Consumer Division's profitability on each dollar of sales in These results cause the Paint Stores Division's ROI to be than the Paint Stores Division's profitability. However, the Paint Store Division's efficiency is significantly the Consumer Division's RO Requirement 5. Calculate each division's R. Interpret your results and offer recommendations for any division with negative R First enter the formula, then calculate the RI for each division, (Enter the amount in thousands. Use parentheses or a minus sign for negative residual incomes) RI %) = than the Consumer Diver's efficiency
Requirement 5. Calculate each division's R. Interpret your results and offer recommendations for any division with negative R First enter the formula, then calculate the RI for each division (Enter the amount in thousands Use parentheses o . Paint St N) - NIM Consumer . Interpret your results and offer recommendations for any division with negative R meeting management's target rate of return. The should work on improving its Improving this may help the dhision achieve positive residual income Requirement 6. Total asset data were provided in this problem. If you were to gather this information from an annual report, how would you measure total assets? Describe your measurement choices and some of the pros and cons of those choices Most companies use the asset balance since the income used in the ROI calculation is earned over the year minus sign for negative residual incomes)
Requirement 6. Total asset data were provided in this problem. If you were to gather this information from an annual report, how would you measure total assets? Describe your measurement choices and some of the pros and cons of those choices Most companies use the asset balance since the income used in the ROI calculation is earned over the year Management must also decide whether they wish to use the gross book value of assets or the net book value of assets The book value is often used because it is easily pued from the balance sheet. However, ROI using that value will artificially rise over time due to Requirement 7, Describe some of the factors that management considers when setting its minimum Sarget rate of retum
The book value is often used because it is easly pulled from the balance sheet. However, ROI using that value will artificially rise over time due to Requirement 7. Describe some of the factors that management considers when setting its minimum target rate of return. Requirement 8. Explain why some firms prefer to use Rl rather than ROI for performance measurement. Y RI does a better job of Requirement 9. Explain why budget versus actual performance reports are insufficient for evaluating the performance of investment centers.
RI does a better job of Requirement 9. Explain why budget versus actual performance reports are insufficient for evaluating the performance of investment centers investment centers are responsible for Y Budget versus actual performance reports are insufficient because they do not measure