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Lohorman Corp 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 provides of capital."

The following data are from Lohmann's aual report that incorporate EVA adjustments to operating profit and average invested capital

	20X1	20X2
Adusted 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	9.40%	9.40%

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

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

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9799188

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