Value of Strategic Management Accounting †Assignmenthelp.com

Question: Discuss about the Value of Strategic Management Accounting. Answer: Finding the after tax operating profit for each division and comparing the profits: Particulars Australia Germany Germany to Australia New Zealand New Zealand to Australia Operating revenues $ 10,479,000 5,200,000 $ 5,980,000 4,800,000 $ 4,176,000 Operating expenses $ 7,510,000 3,600,000 $ 4,140,000 3,500,000 $ 3,045,000 Operating income $ 2,969,000 1,600,000 $ 1,840,000 1,300,000 $ 1,131,000 Tax $ 1,187,600 480,000 $ 552,000 260,000 $ 226,200 After tax operating profit $ 1,781,400 1,120,000 $ 1,288,000 1,040,000 $ 904,800 Income tax rate required 40% 30% 30% 20% 20% The overall profits generated by the organisation in Australia are relevantly at 1,781,400, which is higher than all the relevant profits generated in Germany and New Zealand. The overall profitability in New Zealand and Germany is mainly converted in Australia, where the overall profits are not greater than Australia. After the conversion of the overall profits into Australian currency, the income generated in New Zealand and Germany is relatively lower in comparison with the revenue generated in Australian division. Calculating the ROI and comparing with the divisions: Particulars Australia Germany to Australia New Zealand to Australia Long-term assets 14,845,000 12,320,000 7,349,063 After tax operating profit 1,781,400 1,288,000 904,800 ROI 12.00% 10.45% 12.31% The overall return on investment is mainly depicted in the above table, which could mainly help in understanding the benefits portrayed by deploying relevant long-term assets. However, from the returns on investment calculation overall benefits portrayed by New Zealand deviations are relevantly higher. After the overall conversion of long-term assets and net profit from New Zeeland and Germany into Australian currency, relevant return could be identified. In addition, the overall return on investment is relevantly higher for New Zealand division in comparison with Australian and Germany division. Furthermore, the overall return provided from investment for New Zealand at 12.31%, where the Australian division mainly has returns of 12% and lastly the overall return provided by the Germany division is 10.45%. Hoglund et al. (2016) stated that the overall detection of return on investment mainly allows the organisation to understand the overall income that is been generated from capital employed. Depicting the residual income and comparing with different countries: Particulars Australia Germany to Australia New Zealand to Australia After tax operating profit 1,781,400 1,288,000 904,800 required rate of return 8% 9% 13% Cost of operating assets 14,845,000 12,320,000 7,349,063 Residual income 593,800 179,200 (50,578) The overall residual income is mainly identified from the above table, where the residual income of Austrian branch is relevantly higher than other branches. This only indicates that after all the relevant deduction from debt and expenses the Australian branch is producing more income from the investment. Redoing the overall operating profit instead of net income and depicting why there is a big difference: Particulars Australia Germany to Australia New Zealand to Australia Long-term assets 14,845,000 12,320,000 7,349,063 Operating income 2,969,000 1,840,000 1,131,000 ROI 20.00% 14.94% 15.39% The overall ROI before the tax deduction is relevantly higher for the Australian division, which is mainly due to the high income generated by that division. However, the overall tax rate in Australia is relevantly higher than New Zealand, which is why the organisation is having lower RIO after tax deduction in Australia. Thus, tax rate plays a vital role in identifying the overall return from investment that is been provided by the organisation (Susilawati et al. 2016). Reference: Hglund, L., Holmgren Caicedo, M., Mrtensson, M. and Svrdsten, F., 2016. Management accounting of control practices: a matter of and for strategy. Inthe 9TH INTERNATIONAL EIASM PUBLIC SECTOR CONFERENCE, held in LISBON, PORTUGAL, SEPTEMBER 6-8, 2016.. Susilawati, M., Ludigdo, U., Irianto, G. and Baridwan, Z., 2016. Frame Value of Strategic Management Accounting Based on the Balance of Tri Kaya Parisudha.