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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