Managerial Accounting Case Study

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Case 5-4 Royal Resort and Casino Case 5-4 Royal Resorts and Casino Group Members: Name Name Name College or University Case 5-4 Royal Resorts and Casino This case was about a company called Royal Resorts and Casino also known as RRC. RRC is a publicly-traded company which issues stocks that are traded on the open market, either on a stock exchange or on the over-the-counter market. The fact that this company is a publicly-traded company is important in understanding why this company acts as a single firm verse as three separate firms. Nevertheless, RRC caters to caters to wealthy customers seeking plush surroundings, high quality food and entertainment, and all the “glitz” associated with the best resorts and casinos. This 5 star resort and casino consist of three divisions. The hotel division manages the reservation system and lodging operation. Lodging operations consist of services such as front desk representatives, housekeeping, management, etc. The second division is the gaming division consisting of operations, security, and Junkets. Junkets can be referred to as an excursion for the purpose of pleasure at public or company expense. Then finally there is the entertainment division which consists of restaurants, lounges, catering, and shows. The following table show RRC’s total EVA of 12 million into an EVA by division. (Copy chart here) The chart shows the adjusted accounting profits, Invested capital, Weighted-average cost of capital, and EVA. According to research published by Zimmerman in 2011 (p 180), Economic Value Added is a measure of profitability for evaluation of investment centers. EVA is after-tax operating income or (adjusted accounting profits) minus the total annual cost of capital. If EVA is positive the company is creating wealth. If it is negative, then the company is destroying wealth. This table clearly shows

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