Profit Margin, investment turnover, and return on investment The condensed incom

Question

Profit Margin, investment turnover, and return on investment The condensed income statement for the Consumer Products Division of Fargo Industries Inc. is as follows (assuming no service department charges): Sales Cost of goods sold Gross profit Administrative expenses Income from operations The manager of the Consumer Products Division is considering ways to increase the 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 $55,000,000 of assets have been invested in the Consumer Products Division. If required, round the investment turnover to one decimal place. Profit margin Investment turnover Return on investment b. If expenses could be reduced by?1,650,000 without decreasing sales, what would be the impact on th?pront margin investment turnover, and return on investment for the Consumer Products Division? If required, round the investment turnover to one decimal place Profit margin Investment turnover Return on investment $82,500,000 53,625,000 $28,875,000 15,675,000 $13,200,000 return on investment.

Explanation / Answer

Solution a:

Solution b:

Profit Margin - Fargo Industries Inc. Particulars Choose Numerator / Choose denomerator = Profit Margin Details Amount Details Amount Consumer product division Operating Income $13,200,000.00 Sales $82,500,000.00 16.00%

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