Purchase Solution

Segment Reporting and Analysis

Not what you're looking for?

Ask Custom Question

The following is Tennis Today's financial statement for the year ending December 31, 2006, in total and by division:

Total Division A Divsion B
Assets
Cash $ 46,000 $ 10,000 $ 36,000
Accounts Receivable 89,000 37,000 52,000
Inventory 198,000 72,000 126,000
Fixed Assets 1,850,000 900,000 950,000
Total 2,183,000 1,019,000 1,164,000

Liabilities:
Accounts Payable $ 65,000 $ 28,000 $ 37,000
Bank debt 1,620,000 800,000 820,000
Total 1,685,000 828,000 857,000

Stockholder's Equity 498,000
Total liabilities and equity 2,183,000

Revenues 1,500,000 500,000 1,000,000
Expenses 1,150,000 300,000 850,000
Net Income 350,000 200,000 150,000

A. If the stockholders own shares of the company in total, and not in the individual divisions, how can the divisional managers' performance be evaluated in terms of building stockholder wealth?
B. From and ROI perspective, which of the two divisions has shown better performance? (Assume that ending assets reflect average operating assets for the year.)

Purchase this Solution

Solution Summary

This solution contains step-by-step calculations to determine division evaluation and ROI performance of Tennis Today's financial statements for December 2006.

Solution Preview

ANSWERS

Question A
If the stockholders own shares of the company in total, then the divisional managers' performance ...

Purchase this Solution


Free BrainMass Quizzes
Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.