AFM102 Lecture Notes - Lecture 17: Balanced Scorecard, Transfer Pricing, Income Statement

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM102
• Professor: Jie Joyce Tian

Document Summary

Among so many segments, do we need to keep/drop them. = operating income / average operating assets iclicker question. Acquire average ,000,000 new assets throughout the year and incur ,000 in additional fc. Sales increase by m with the same cm ratio as the current operations. Roi is a ratio not in dollars. A manager may reject a profitable investment opportunity if it decreases the current roi. Operating assets * minimum required rate of return) If ri > 0 this means that roi > minimum required rate of return iclicker question. Division a had an roi last year of 15%. The division"s minimum required rate of return is 10%. Roi = operating income / average operating assets. Ri = oi - (average operating assets * min rate of return) The manager would accept the project if his compensation is increased. The manager should accept the project if the project increases the firm"s operating income/cash flow.