Mallory, Inc The Tax Rate for Mallory, Inc

question 16

Essay

Mallory, Inc. has the following data available for two of its divisions for last year:
$$\begin{array} { l c r } && \text { Europearn } \\& \text { Asian Division } & \text {Division } \\ \text { Sales } & \$ 460,000 & \$ 900,000 \\\text { Contribution Margin } & 184,000 & 470,000 \\\text { Operating income } & 92,000 & 90,000 \\\text { Average operating assets } & 368,000 & 750,000 \\\text { Weighted average cost of capital } & 14 \% & 14 \%\end{array}$$
The tax rate for Mallory, Inc. is 18%.
Required:
(1) Compute the following for each division:
(a) Profit margin.
(b) Asset turnover.
(c) ROI.
(d) Residual income.
(e) EVA (assume there are no current liabilities).
(2) Briefly discuss which division appears most successful and why?

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Definitions:

Internal Locus

The belief that one has control over the events and outcomes in their life due to personal actions or characteristics.

Influence

The capacity to have an effect on the character, development, or behavior of someone or something.

Laboratory Tasks

Specific assignments or experiments conducted in a controlled environment.

Sensation Seeking Scale

a psychological tool used to measure an individual's propensity for seeking novel, complex, and intense sensations and experiences.