Kristen Roper Oversees Her Company's Largest and Most Profitable Investment

Essay

Kristen Roper oversees her company's largest and most profitable investment center. She has asked you, as her staff accountant, to compute the center's ROI, residual income, and EVA for the month of August 20xx, using the following information (rounded to two decimal places):
$\begin{array}{|l|l|}\hline \text { August } 20 \mathrm{xx} \text { operating income } & \$ 300,000 \\\hline \text { August 20xx sales } & 450,000 \\\hline \text { Assets at July 31, 20xx } & 500,000 \\\hline \text { Assets at August 31, 20xx } & 510,000 \\\hline \text { August } 20 \times 6 \text { income taxes } & 90,000 \\\hline \text { Current liabilities at August } 31,20 \mathrm{xx} & 250,000 \\\hline \text { Cost of capital } & 19 \% \\\hline \text { Desired ROI } & 52 \% \\\hline\end{array}$