Profit Margin, Investment Turnover, and Return on Investment
The condensed income statement for the Consumer Products Division of Tri-State Industries Inc is as follows (assuming no support department allocations): Sales $960,000 Cost of goods sold (432,000) Gross profit $528,000 Administrative expenses (288,000) Operating income $240,000 The manager of the Consumer Products Division is considering ways to increase the return on investment. A. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products, Division, assuming that 2,400,000 of assets have been invested in the Consumer Products Division. Round the investment turnover to one decimal place. Profit margin % Investment turnover % Return on investment % B. If expenses could he reduced by $48,000 without decreasing sales, what would he the impact on the profit margin, investment turnover, and return on investment for the Consumer Products Division? Round the investment turnover to one decimal place. Profit margin % Investment turnover % Return on investment %Subscribe our channel for more SOLUTION
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