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Mary's Auto Shop Inc

Accounting

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Mary's Auto Shop Inc. allows its divisions to operate as autonomous units. Their results for the current year were as follows:

               

               

 

Sport

Terrain

City

Revenues

$1,700,000

$800,000

$6,000,000

Current assets

230,000

40,000

410,000

Capital assets

870,000

660,000

1,590,000

Current liabilities

100,000

100,000

500,000

Net operating income

232,000

42,000

602,000

After-tax income

186,000

34,000

482,000

Weighted average cost of capital

10%

10%

10%

 

 

Required:

For each division compute (to two decimal) the:

1.                  Return on sales in %

 

 

 

 

 

 

 

 

 

 

2.             Return on investment (to two decimal) based on total assets employed in %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.             Economic value added

 

 

 

 

 

 

 

 

 

 

 

 

4.             Residual income based on net operating income