# MGAB03H3 Lecture Notes - Lecture 16: Icq, Earnings Before Interest And Taxes, Weighted Arithmetic Mean

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## Document Summary

16. 21 ri, roi and eva - brannard company: residual income. = operating income (rate of return x average assets) = adjusted after-tax income [weighted average cost of capital x (adjusted total assets current liabilities)] = [,000 x (1-0. 36)] [12% x (,000,000 - ,000)] 16. 23 roi, ri, breakeven point, contribution margin - oslo company. [note: part c of this problem requires knowledge of breakeven analysis from chapter 3. : before calculating roi, it is first necessary to calculate income: Roi = ,000/[(,000 + ,000)/2] = 10: residual income: Residual income: variable cost per unit: ,000/300,000 = . 50. Breakeven units = fixed costs/ cm per unit. Cm per unit = . 00 - . 50 = sh. 50. All answers are calculated using the roi formula and dupont analysis formulas, assuming that income is equal to operating income and that investment is equal to total assets: Calculations in order of solving the unknowns: roi = income/ investment therefore.