96 using may cause a manager to reject a project that may be profitable to the compa 4308003

96) Using ________ may cause a manager to reject a project that may be profitable to the company as a whole.

A) operating income

B) residual income

C) ROI

D) EVA

97) A manager can increase return on investment (ROI) by doing which of the following?

A) Increase operating expenses

B) Increase operating assets

C) Decrease sales

D) Decrease operating expenses

98) Which of the following financial performance measures can be used to compare potential projects of different sizes?

A) ROI

B) Residual income

C) Sales revenue

D) Operating income

99) Assume the Air Conditioning division of the General Appliance Corporation had the following results last year (in thousands). Management's target rate of return is 15% and the weighted average cost of capital is 10%. Its effective tax rate is 35%.

Sales$10,000,000

Operating income 2,000,000

Total assets2,500000

Current liabilities 820,000

What is the division's sales margin?

A) 80.00%

B) 32.80%

C) 20.00%

D) 400.00%

100) Assume the Air Conditioning division of the General Appliance Corporation had the following results last year (in thousands). Management's target rate of return is 15% and the weighted average cost of capital is 10%. Its effective tax rate is 35%.

Sales$10,000,000

Operating income 2,000,000

Total assets2,500000

Current liabilities 820,000

What is the division's capital turnover?

A) 5.00

B) 4.00

C) 1.25

D) 3.05

101) Assume the Air Conditioning division of the General Appliance Corporation had the following results last year (in thousands). Management's target rate of return is 15% and the weighted average cost of capital is 10%. Its effective tax rate is 35%.

Sales$10,000,000

Operating income 2,000,000

Total assets2,500000

Current liabilities 820,000

What is the division's Return on Investment (ROI)?

A) 400.00%

B) 20.00%

C) 80.00%

D) 32.80%

102) Assume the Air Conditioning division of the General Appliance Corporation had the following results last year (in thousands). Management's target rate of return is 15% and the weighted average cost of capital is 10%. Its effective tax rate is 35%.

Sales$10,000,000

Operating income 2,000,000

Total assets2,500000

Current liabilities 820,000

What is the division's Residual Income (RI)?

A) $1,625,000

B) $1,132,364

C) $1,750,000

D) $500,000

103) Ringo Corporation had the following results last year (in thousands). Management's target rate of return is 15% and the weighted average cost of capital is 10%. Its effective tax rate is 35%.

Sales$20,000,000

Operating income 4,000,000

Total assets8,000,000

Current liabilities 4,820,000

What is the division's Return on Investment (ROI)?

A) 500.00%

B) 20.00%

C) 50.00%

D) 32.80%

104) The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year. Shareholders require a return of 7%. Management calculated a weighted-average cost of capital (WACC) of 5%. Allied's corporate tax rate is 30%.

Sales$700,000

Operating income $175,000

Total assets$1,500000

Current liabilities 600,000

What is the division's sales margin?

A) 25.00%

B) 46.67%

C) 11.67%

D) 40.00%

105) The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year. Shareholders require a return of 7%. Management calculated a weighted-average cost of capital (WACC) of 5%. Allied's corporate tax rate is 30%.

Sales$700,000

Operating income $175,000

Total assets$1,500000

Current liabilities 600,000

What is the division's capital turnover?

A) 0.47

B) 4.00

C) 8.57

D) 2,50