Solution-Compute the EVA for Lohmann

Compute the EVA for Lohmann

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Reference no: EM132758627

Problem - Lohmann Corporation is a major supplier to makers of outdoor power equipment. According to the company's annual report, "management subscribes to the premise that the value of our company is enhanced if the capital invested in its operations yields a cash return that is greater than that expected by the providers of capital."

The following data are from Lohmann's annual report that incorporate EVA adjustments to operating profit and average invested capital (amounts in thousands):

	20X1	20X2
Adjusted before tax operating profit	$78,000	$80,000
Cash taxes	20,500	22,600
Adjusted average invested capital	650,000	600,000
Cost of capital	9.4%	9.4%

Required -

1. Compute the EVA for Lohmann for 20X1 and 20X2.

2. Did Lohmann's overall performance improve from 20X1 to 20X2? Explain.

Reference no: EM132758627

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Compute the EVA for Lohmann

Reference no: EM132758627

Reference no: EM132758627

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