Consider the following facts: Divisin A in a firm has generated $847,000 of profits on $24...

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General Management

Consider the following facts: Divisin A in a firm has generated$847,000 of profits on $24 million worth of sales, using $32million worth of dedicated assets. The cost for this firm is 9%,and the firm has invested %7.3 million in this division. A.Calculate the return on sales and return on Assets of Divisin A. Ifthe hurdle rate for ROS and ROA in this firm are, respectively,0.06 and 0.04, has the division performed well? B. Calculate theEVA of Division A (with the assumption that reported profits havealready been adjusted) . Based on this EVA, has this divisionperformed well? C. Suppose you were CEO of this firm, how would youchoose between ROS/ROA and EVA for evaluating this division?

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Given Firms generated Profit 847000 Total Sales 24 Million 24000000 The cost of capital of firm 9 Capital Invested 73 million 7300000 Firms Total Assets 32000000 A Calculation of the Return on Sales ROS Return on Assets ROA for See Answer

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