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	$172,354		$757,600		$947,000
Parks and Resorts	55,358		373,200		622,000
Studio Entertainment	5,115		238,700		341,000
Consumer Products	108,129		460,700		271,000

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.

	Profit Margin	Investment Turnover	ROI
Media Networks	%		%
Parks and Resorts	%		%
Studio Entertainment	%		%
Consumer Products	%		%

b. How do the four sectors differ in their profit margin, investment turnover, and return on investment?

has the highest profit margin, while has the lowest profit margin. has the highest return on investment, while has the lowest return on investment.

Answer 1