Kase Tractor Company Allows Its Divisions to Operate as Autonomous

question 99

Essay

Kase Tractor Company allows its divisions to operate as autonomous units.The operating data for 2017 follow:
$$\begin{array} { | l | r | r | r | } \hline &{ \text { Ploughs } } & { \text { Tractors } } & { \text { Combines } } \\\hline \text { Revenues } & \$ 2250000 & \$ 500000 & \$ 4800000 \\\hline \text { Accounts receivable } & 800000 & 152500 & 1435000 \\\hline \text { Operating assets } & 1000000 & 400000 & 1750000 \\\hline \text { Net operating profit } & 220000 & 60000 & 480000 \\\hline \text { Taxable income } & 165000 & 90000 & 385000 \\\hline\end{array}$$
Required:
a.Calculate the investment turnover for each division.
b.Calculate the return on sales for each division.
c.Calculate the return on investment for each division.
d.Which division manager is doing best? Why?
e.What other factors should be included when evaluating the managers?
For parts (b)and (c)income is defined as operating profit.
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Recognize the effects of trade policies and subsidies on prices and trade volumes.

Understand the role of specialization and trade in allowing consumption outside the production possibility curve.

Realize the differences between acquired and natural comparative advantages.

Comprehend the significance of factor endowments in explaining trade flows according to the Heckscher-Ohlin theorem.

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Definitions:

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Generic term for any unspecified or hypothetical device or product, often used in business or economics as a placeholder name.

Olive Oil

A liquid fat obtained from olives, commonly used in cooking, cosmetics, pharmaceuticals, and soaps.

Andalusia Region

A geopolitical and cultural region in the south of Spain, known for its historical significance and diverse heritage.

Olive Trees

Perennial plants known for their fruit and oil, significant in culinary, cosmetic, and health products, with cultural and economic importance in many regions.