Question

Required information [The following information applies to the questions displayed below.) A food manufacturer reports the following for two of its divisions for a recent year. ($millions) Invested assets, beginning Invested assets, ending Sales Operating income Beverage Division $3,200 3,100 2,698 Cheese Division $ 6,100 6,000 3,942 710 366 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.) Return on Investment I Choose Denominator: Choose Numerator: = Return on Investment Investment Center Return on investment Beverage Cheese

Answer 1

Return on Investment Choose Numerator: Choose Denominator = Return on Investment Investment Center Operating Inocome / Avearge Invested assets = Return on Investment Beverage 366 / $ 3,150 11.62% Cheese $ 710 / $ 6.050 = 11.74% Profit Margin Choose Numerator: / Choose Denominator =Profit Margin Investment Center Operating Income 17 Sales = Profit Margin Beverage 366 / $ 2,698 13.57% Cheese $ 710 $ 3,942 = 18.01% Investment Turnover Choose Numerator: Choose Denominator = Investment Turnover Investment Center Sales I/Averge Invested assets l=Investment Turnover Beverage 2,698 $ 3,150 0.86 Cheese 3,942 / $ 6,050 0.65 Working Notes: Avearge Invested assets = (Beginning Invested assets+Ending Invested assets)/2 Beverage Division = (3,200+$3,100)/2 = $3,150 Cheese Division = ($6,100+$6,000)/2 = $6,050