|
President of VanInvest Inc., your boss, is expecting you to
calculate and rank "margin", "turnover", and Return on investment"
of 3 business segments of the company based on financial
information that follows: |
|||||||
| Segments | Sales | Operating Income | Average Assets | ||||
| B2B-wholesale | $ 1,000,000 | $ 50,000 | $ 1,250,000 | ||||
| B2C-Retail | 1,750,000 | 225,000 | 3,000,000 | ||||
| Online | 800,000 | 80,000 | 1,050,000 | ||||
| You are also asked to explain the rankings differences on the evaluative models that are used? | |||||||
| Particulars | B2B-wholesale | B2C-Retail | Online |
|
Margin (Operating Income/Sales*100) |
5% | 12.86% | 10% |
| Rank | 3 | 1 | 2 |
|
Turnover(sales) |
1,000,000 | 1,750,000 | 800,000 |
| Rank | 2 | 1 | 3 |
|
Return on Investment (Operating income/Average assets*100) |
4% | 7.5% | 7.62% |
| Rank | 3 | 2 | 1 |
The margin method focuses on operating income. Here B2C-Retail has the highest operating income so it is in rank 1.
The turnover method focuses on sales. Here B2C-Retail has highest sales so it is in rank 1
Return on investment method focuses on how much income you have earned from investing in Assets.
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