Question

Jef Doyle is evaluating results for three separate business segments under his control. Selected financial

information for each segment follows:

	Sales	Operating Income	Average Assets
Segment A	$2,200,000	$150,000	$2,800,000
Segment B	3,700,000	480,000	6,200,000
Segment C	1,700,000	180,000	2,200,000

Calculate "margin," "turnover," and "return on investment" for the three segments.

	A.	Segment A Margin 0.168 Segment B Margin 0.230 Segment C Margin 0.115 Segment A Turnover 0.885 Segment B Turnover 0.696 Segment C Turnover 0.782 Segment A ROI 0.153 Segment B ROI 0.087 Segment C ROI 0.181
	B.	Segment A Margin 0.058 Segment B Margin 0.119 Segment C Margin 0.104 Segment A Turnover 0.775 Segment B Turnover 0.595 Segment C Turnover 0.762 Segment A ROI 0.043 Segment B ROI 0.067 Segment C ROI 0.071
	C.	Segment A Margin 0.068 Segment B Margin 0.130 Segment C Margin 0.106 Segment A Turnover 0.786 Segment B Turnover 0.597 Segment C Turnover 0.773 Segment A ROI 0.054 Segment B ROI 0.077 Segment C ROI 0.082
	D.	Segment A Margin 0.088 Segment B Margin 0.149 Segment C Margin 0.107 Segment A Turnover 0.787 Segment B Turnover 0.576 Segment C Turnover 0.770 Segment A ROI 0.033 Segment B ROI 0.057 Segment C ROI 0.061
	E.	Segment A Margin 0.038 Segment B Margin 0.109 Segment C Margin 0.101 Segment A Turnover 0.725 Segment B Turnover 0.526 Segment C Turnover 0.792 Segment A ROI 0.083 Segment B ROI 0.087 Segment C ROI 0.084
	F.	None of the above

Answer 1

Calculation of Margin, Turnover and Return on Investment
	Margin=	Operating Profit/Sales
	Segment A	150000/2200000
		0.068
	Segment B	480000/3700000
		0.130
	SegmentC	180000/1700000
		0.106
	Turnover=	Sales/Average Asset
	Segment A	2200000/2800000
		0.786
	SegmentB	3700000/6200000
		0.597
	SegmentB	1700000/2200000
		0.773
	Return on Investment=		Operating Profit/Average Assets
	Segment A	150000/2800000
		0.054
	SegmentB	480000/6200000
		0.077
	Segment C	180000/2200000
		0.082
Answer is (C)