A Company Wants to Assess the Performance of Its Management

Short Answer

A company wants to assess the performance of its management using the ROPI-based analysis. At the beginning of the period, the company has net operating assets of $150 million, and its weighted cost of capital (WACC) for this period is 6%.
a. What is the minimum level of NOPAT the company will need in this year for management to report it has achieved an acceptable level of profit under the ROPI analysis?
b. Why is it often advantageous for a company to use ROPI analysis to evaluate managers?