Question

Use the following information for the Exercises below. [The following information applies to the questions displayed below) A food manufacturer reports the following for two of its divisions for a recent year Beverage Division $2,701 2,613 2.701 369 Cheese Division $4,494 (Sillions) Invested assets, beginning Invested assets, ending sales Operating income 4,420 3,945 Exercise 9-12 Return on investment LO A1, A2 1. Compute return on investment 2. Compute profit margin. 3. Compute investment turnover for the year. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute return on investment. (Enter your answers in millions.) Choose Numerator: Return on Investment Choose Denominator: Return on Investment Investment Center Return on investment Beverage Cheese Required 2 >

Answer 1

Requirement 1: Return On Investment = Operating Income / Average Invested Assets Average Invested Assets = (Beginning Invested Assets + Ending Invested Assets) / 2 Return on Investment Operating Income / Average Invested Assets = Return on investment Investment centre Beverage Cheese / 369 654 (2,701 + 2613)/2 (4,494+4,420)/2 = = 13.9% 14.7% Requirement 2: Profit Margin = Operating Income / Sales Profit Margin Operating Income / Sales = | Profit Margin Investment centre Beverage Cheese 369 654 2701 3945 13.7% 16.6% Requirement 3: Investment Turnover = Sales/ Average Invested Assets Investment Turnover / Average Invested Assets | = | Investment Turnover Sales Investment centre Beverage Cheese 2701 3945 7 7 (2,701 + 2,613)/2 (4,494+ 4,420)/2 1.02 0.89 Please feel free to leave a comment below if you have any doubts. Please rate us to serve better