Question

A food manufacturer reports the following for two of its divisions for a recent year. ($millions)...

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

($millions) Beverage Division Cheese Division
Invested assets, beginning $ 2,675 $ 4,468
Invested assets, ending 2,599 4,406
Sales 2,687 3,931
Operating income 355 640


1. Compute return on investment.
2. Compute profit margin.
3. Compute investment turnover for the year.

Compute return on investment. (Enter your answers in millions.)

Return on Investment
Choose Numerator: / Choose Denominator: = Return on Investment
Investment Center / = Return on investment
Beverage / =
Cheese / =

Compute profit margin. (Enter your answers in millions.)

Profit Margin
Choose Numerator: / Choose Denominator: = Profit Margin
Investment Center / = Profit margin
Beverage / =
Cheese / =

Compute investment turnover for the year. (Enter your answers in millions.)

Investment Turnover
Choose Numerator: / Choose Denominator: = Investment Turnover
Investment Center / = Investment turnover
Beverage / =
Cheese / =
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Homework Answers

Answer #1

1.

Return on Investment
Investment Center Operating Income / Average Invested Assets = Return on Investment
Beverage 355 2,637 13.5 %
Cheese 640 4,437 14.4 %

2.

Profit Margin
Investment Center Operating Income / Sales = Profit Margin
Beverage 355 2,687 13.2 %
Cheese 640 3,931 16.3 %

3.

Investment Turnover
Investment Center Sales / Averge Invested Assets = Investment Turnover
Beverage 2,687 2,637 1.02
Cheese 3,931 4,437 0.89
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