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Sapsora Company uses ROI to measure the performance of its operating divisions and to reward...

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Accounting

Sapsora Company uses ROI to measure the performance of its operating divisions and to reward division managers. A summary of the annual reports from two divisions is shown below. The companys weighted-average cost of capital is 12 percent.

Division A Division B
Total assets $ 6,180,000 $ 8,570,000
Current liabilities 650,000 1,850,000
After-tax operating income 1,060,000 1,202,800
ROI 22 % 14 %

b.

Would EVA more clearly show the relative contribution of the two divisions to the company as a whole?

Divison A

Divison B

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