Pleasanton Company produces three products: X, Y, and Z. The income statement for 2014 is as follows:

Tax rate



Pleasanton Corporation has a target ROI of 17 percent.

a.  Calculate the following amounts for each division: ROI, Residual Income, EVA

b.  The Mixing Division has an opportunity to invest in a major new project with an expected return of 16%. The division manager’s performance is assessed based on division ROI. Would the company overall benefit from moving forward with this project? How does this affect the manager’s decision on whether to proceed?

4.  Pleasanton Industries has identified list of financial and nonfinancial performance indicators:

Average call wait

Average customer survey rating

Employee turnover ratio

Headcount growth

Job offer acceptance rate

Market share

Net profit margin

New product ROI

Number of complaints 

Number of defects reported

Service error rate

Time to market on new products

Year over year revenue growth

a.     Assign the identified metrics to Pleasanton’s four balanced scorecard categories of (1) Financial Success, (2) Customer Satisfaction and Brand Improvement, (3) Business Process Improvement, and (4) Learning and Growth of Motivated Workforce.

b.     Is there value in tracking all these different measures, rather than a single financial measure such as ROI or EVA?

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