Question

A food manufacturer reports the following for two of its divisions for a recent year.

($millions)	Beverage Division				Cheese Division
Invested assets, beginning	$	2,672			$	4,465
Invested assets, ending		2,598				4,405
Sales		2,686				3,930
Operating income		354				639

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 3 Required 2 Compute return on investment. (Enter your answers in millions.) Return on Investment IChoose Denominator: Return on Investment Choose Numerator: Investment Center Operating income 354 Average invested assets Return on investment Beverage 0 Cheese $ 639 0 Complete this question by entering your answers in the tabs below. Required 3 Required 1 Required 2 Compute profit margin. (Enter your answers in millions.) Profit Margin IChoose Denominator: Choose Numerator: Profit Margin Profit margin Investment Center Beverage Cheese 0 Complete this question by entering your answers in the tabs below. Required 3 Required 1 Required 2 Compute investment turnover for the year. (Enter your answers in millions.) Investment Turnover Choose Denominator: Choose Numerator: Investment Turnover Investment Center Investment turnover Beverage 0 Cheese 0

Answer 1

Investment Center Beverage Cheese Return on Investment Numerator Denominator = Return on Investment Operating Income | 7 Average invested assets = Return on Investment 354 / 2635 = 13.4% 639 / 4435| = || 14.4% Investment Center Beverage Cheese Profit margin Numerator Operating Income 1 354 / 639 / Denominator = Sales = 2686 = 3930 = Profit margin Profit margin 13.2% 16.3% Investment Center Beverage Cheese Investment Turnover Numerator 1 Denominator = | Investment Turnover Sales 17 Average invested assets = | Investment Turnover 2686 / 2635 = 1.02 39301 / 4435) = 0.89