Economic Value Added
E 13. Leesburg, LLP, is evaluating the performance of three divisions: Lake, Sumter, and Poe. Using the data that appear on the next page, compute the economic value added by each division, and comment on each division’s performance.
|
Lake |
Sumter |
Poe |
|
|
Sales |
$100,000 |
$100,000 |
$100,000 |
|
After-tax operating income |
$10,000 |
$10,000 |
$20,000 |
|
Total assets |
$25,000 |
$12,500 |
$25,000 |
|
Current liabilities |
$5,000 |
$5,000 |
$5,000 |
|
Cost of capital |
15% |
15% |
15% |