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Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello
Edition 17ISBN: 978-0078025778Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello
Edition 17ISBN: 978-0078025778 Exercise 33
Comparing ROI and Residual Income
Use the information in Brief Exercise 25.2 to compute the ROI for the Pennsylvania factory using total assets and assets net of depreciation. Now find residual income if the company expects an 20 percent return on total assets. Is the Pennsylvania factory performing up to management's expectations?
Brief Exercises 25.2
Evaluate Business Performance Using ROI
Zylex Corporation has multiple factories across the United States. The upper management at Zylex evaluates each factory based on the capital turnover ratio from the DuPont system. Below is information for the factory in Pennsylvania for the past year.
Compute the capital turnover ratio using (1) total assets and (2) assets net of depreciation. Which investment base will the Pennsylvania factory manager prefer and why?
Use the information in Brief Exercise 25.2 to compute the ROI for the Pennsylvania factory using total assets and assets net of depreciation. Now find residual income if the company expects an 20 percent return on total assets. Is the Pennsylvania factory performing up to management's expectations?
Brief Exercises 25.2
Evaluate Business Performance Using ROI
Zylex Corporation has multiple factories across the United States. The upper management at Zylex evaluates each factory based on the capital turnover ratio from the DuPont system. Below is information for the factory in Pennsylvania for the past year.
Compute the capital turnover ratio using (1) total assets and (2) assets net of depreciation. Which investment base will the Pennsylvania factory manager prefer and why?
Explanation
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Information relating to a factory of Cor...
Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello
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