Question

Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center).

Investment Center	Sales			Income			Average Invested Assets
Electronics	$	40,000,000		$	2,880,000		$	16,000,000
Sporting goods		20,000,000			2,040,000			12,000,000

Compute profit margin and investment turnover for each department. Which department generates the most net income per dollar of sales? Which department is most efficient at generating sales from average invested assets?

Compute profit margin for each department. Which department generates the most net income per dollar of sales? Profit Margin I Choose Denominator: Choose Numerator: = Profit Margin Profit Margin Investment Center Electronics Sporting Goods Which department generates the most net income per dollar of sales?

Answer 1

Sales Net income Aveg Invested Assets Electronics Sporting Goods 40000000 20000000 2880000 2040000 16000000 12000000 Profit Magin Choose Numerator : Choose Denominator Net income Sales Revenue Electronics 2880000 40000000 Sporting Goods 2040000 20000000 which Department generates the most net income per dollar sales Profit Magin 7.20% 10.20% Sporting Goods Investmnet Turnover Choose Numerator : Choose Denominator Sales Average invested assets Electronics 40000000 16000000 Sporting Goods 20000000 12000000 which Department is most efficient in generating sales from assets Investmnet Turnover 2.50 1.67 Electronics