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Calculate return on investment and economic value added use

Calculate Return on Investment (ROI) and Economic Value Added (EVA).

Use the following data for Eastern Investments Company to calculate ROI and EVA for 2013 and 2014. Analyze the results.

Eastern Investments 2013 2014

Sales $325,000,000 $395,000,000

Net Operating Profit After Tax $55,000,000 $60,000,000

Net Income $35,000,000 $42,000,000

Invested Capital $125,000,000 $145,000,000

Adjusted Average Invested Capital $350,000,000 $380,000,000

Cost of Capital 11% 11%

Required:

Calculate ROI for 2013 and 2014
Calculate EVA for 2013 and 2014
Is Eastern Investments performance improving year on year? Why?

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Accounting Basics: Calculate return on investment and economic value added use

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Accounting Basics: Calculate return on investment and economic value added use

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