Question

Divisional income statements and return on investment analysis Lynch Company is a diversified investment company with the operativisions organized as follows: investment Condensed of the three divisions for the year ended June 10, 2018, are Mutual Fund Division Investment Sanking Division Electronic Brokerage Division $ 0000 3,091,200 1,120,000 $4,560.000 Operating expenses 54.140,000 2,580,000 5.175,000 3,739,200 3300,000 The management of Lynch Company evaluating each vision as a basis for planning a future Required i ng that there were 1. Prepare condensed divisional come statements for the tree division E.F. Lynch Company Divisional Income Statements Forth Yorded June 2013 Income to

Answer 1

Required 1 :
	Mutual fund division	Electronic brokerage division	Investment banking division
Fee revenue	4140000	3360000	4560000
Operating expense	2980800	3091200	3739200
Income from operations	1159200	268800	820800

Required 2 :
	Profit Margin [ Operating income / Fee revenue ]	Investment turnover [ Fee revenue / Invested assets ]	ROI [ Profit margin * Investment turnover ]
Mutual fund division	28%	0.8	22.4%
Electronic brokerage division	8%	3.0	24.0%
Investment banking division	18%	1.2	21.6%

Required 3 :

When faced with limited funds for expansion, management should consider as expansion of the Electronic Brokerage division first.