Question 17 (4 points) B Division of X Company had the following information for

Question

Question 17 (4 points)

B Division of X Company had the following information for the past year

Calculate B Division's Sales Margin and Capital Turnover.

Question 17 options:

Sales margin: 25% Capital turnover: 3

Sales margin: 12% Capital turnover: 33.3

Sales margin: 3% Capital turnover: 4

Sales margin: 4% Capital turnover: 3

Question 18 (4 points)

B Division of X Company had the following information for the past year

Calculate B Division's economic value added (EVA).

Question 18 options:

$92,000

negative $4,000

$32,000

$372,000

Sales $3,200,000 Average Invested Capital 800,000 Income 96,000 Minimum Required Rate of Return for B 11% Weighted Average Cost of Capital for X 10%

Explanation / Answer

Answer to Question 17.

Sales Margin = Income / Sales
Sales Margin = $96,000 / $3,200,000
Sales Margin = 3%

Capital Turnover = Sales / Average Invested Capital
Capital Turnover = $3,200,000 / $800,000
Capital Turnover = 4

Answer to Question 18.

Average Capital Invested = Average Total Assets - Average Current Liabilities
Average Capital Invested = $950,000 - $50,000
Average Capital Invested = $900,000

Net Income = Income * (1 - tax)
Net Income = $200,000 * (1 - 0.30)
Net Income = $140,000

Economic Value Added = Net Income - Average Capital Invested * WACC
Economic Value Added = $140,000 - $900,000 * 12%
Economic Value Added = $140,000 - $108,000
Economic Value Added = $32,000

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.