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How would the divisions be ranked

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Question - Top management of the Pearl Corp. is trying to construct a performance evaluation system to use to evaluate each of its three divisions. Financial data are as follows:

                                                           Division A           Division B       Division C

Total assets                                          $830,000        $10,700,000        $6,375,000

Noninterest-bearing current liabilities      30,000            1,250,000           500,000

NOPAT                                                 102,000          950,000               780,000

Tax rate                                               40%               40%                   40%

Required rate of return                          9%                 12%                   15%

How would the divisions be ranked (from best to worst performance) if the evaluation were based on net income compared to return on investment? Is management more likely to over or under invest under each of these?

Reference no: EM131799329

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