Springfield

Case 11-4 Enager Industries, Inc. 1. Why was McNeils new carrefour regurgitate rejected? Should it have been? Explain. ROA CALCULATION FOR EACH NEW cross increase A Product B Unit earn revenue 100,000 75,000 Unit Price 18 21 join gross sales $1,800,000 $1,575,000 shifting Cost per Unit Variable Costs fix Costs realise Income Total asset Investment bribe on Assets 9 900,000 510,000 $390,000 $3,000,000 13.00% 9 675,000 510,000 $390,000 $3,000,000 13.00% Product C 60,000 24 $1,440,000 9 540,000 510,000 $390,000 $3,000,000 13.00% The McNeils new product proposition was rejected beca hold it shows a return on assets slight than the required by the president of 15%. McNeils proposal should have been recognized beca do: The ROA for the new product is higher than the menses ROA for the Consumers Divisions of 10.8% 13% is higher than the current ROA of the family as a whole (9.4%). It is higher than the hypothetical 12% ROA set by Hubbard that covers interest costs of borrowing not bad(p). If EVA is calculated instead, the residual income is positive. EVA = Net Income (Cost of Capital x Investment) = 390,000 (12% x 3,000,000) = 30,000 1 2. What inferences do you draw from a capital arise argumentation for 1993? Is a breakdown by sections useful? Would a cash flow statement be useful in evaluating effect?

If you had one that showed a breakdown by share, how would you use it?. A cash flow statement helps to evaluate performance because: It determines the ability of the company and each division to generate cash flows from operations. capital is king for some analysts. We could see to it how is the cash for investments being alloc ated. How is the company financing their new! capital expenditures, stocks or debt. A breakdown by division is really useful because: An compendium of the performance of each division is possible. Cash generated by division is a better metric of operable efficiency. I would use cash flow statements by divisions to: memorise if cash flows ease the...If you want to get a honorable essay, order it on our website: OrderEssay.net

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