Stevens Company Has Two Divisions That Report on a Decentralized

question 34

Essay

Stevens Company has two divisions that report on a decentralized basis. Their results for 2011 were as follows: $\begin{array}{lcc}&\text { Helmet } & \text { Ball } \\\text { Sales } & £ 150,000 & £ 300,000 \\\text { Income } & £ 15,000 & £ 45,000 \\\text { Asset base } & £ 75,000 & £ 150,000 \\\text { Weighted average cost of capital } & 12 \% & 12 \%\end{array}$
a.Return on investment (ROI) if the desired rate of return is 12 per cent.
b.Residual income if the desired rate of return is 20 per cent.
c.EVA.
d.Turnover if the desired rate of return is 25 per cent.
e.Margin for each division if the desired rate of return is 10 per cent.

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Definitions:

Entrepreneurial Process

A series of steps taken by entrepreneurs to conceptualize, launch, and manage a new business venture.

Own Bosses

A term often associated with entrepreneurship, indicating individuals who are self-employed and have full control over their work, decisions, and income.

Independent

Free from external control and constraint, often used to describe self-reliant businesses or individuals making decisions autonomously.

Influencing Odds

The act of affecting the probability or likelihood of a particular outcome or event.