Question

Return on investment

Commodore Entertainment has four profitable business segments, described as follows:

• Media Networks: Television and radio
• Parks and Resorts: Resorts, including Commodore land
• Studio Entertainment: Motion pictures, musical recordings, and stage plays
• Consumer Products: Character merchandising, Commodore stores, books, and magazines

Commodore Entertainment recently reported sector income from operations, revenue, and invested assets as follows:

	Income from     Operations		Revenue		Invested     Assets
Media Networks	$160,552		$683,200		$854,000
Parks and Resorts	72,788		352,200		587,000
Studio Entertainment	8,775		245,700		351,000
Consumer Products	133,229		520,200		289,000

a. Use the DuPont formula to determine the return on investment for the four Commodore Entertainment sectors. Round Profit Margin and ROI to one decimal place and Investment Turnover to two decimal places.

Answer 1

DuPont Formula:

ROI = Profit Margin x Investment turnover

Calculation of ROI:

Formula table is as follows: