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Performance measurement

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Performance measurement

  • This topic has 3 replies, 2 voices, and was last updated 10 months ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • March 16, 2022 at 12:15 pm #651360
    pinkyjovin123
    Participant
    • Topics: 92
    • Replies: 134
    • ☆☆☆

    Hello Sir

    A company wishes to evaluate a division which has the following extracts from income statement and statement of financial position.

    Income statement

    Sales
    Gross profit
    Net profit

    Statement of financial position

    NCA. 750000
    Current assets 350000
    CL (450000)
    Net Assets 650000

    What is the residual income for the division if the company has a cost of capital of 18%

    Answer is 3000

    Could you please show me the steps …

    TIA

    March 16, 2022 at 4:03 pm #651373
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    You have not typed out the information from the SOPL.

    The residual income is the net profit less 18% x $650,000.

    This is all explained in my free lectures.

    March 18, 2022 at 2:25 pm #651500
    pinkyjovin123
    Participant
    • Topics: 92
    • Replies: 134
    • ☆☆☆

    Sorry Sir

    Can you please show me how we get the answer?

    Completed question is below:

    Sales 500000

    Gross profit 200000

    Net profit 120000

    Answer is 3000

    TIA

    March 18, 2022 at 8:00 pm #651507
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    Have you actually read my previous reply (and have you actually watched my free lectures on this?).

    Try doing what I wrote before. Take the net profit and subtract 18% x $650,000.

  • Author
    Posts
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