Exercise 24-23 Profit margin and investment turnover LO A2 L\'Oréal reports the
ID: 2513092 • Letter: E
Question
Exercise 24-23 Profit margin and investment turnover LO A2 L'Oréal reports the following for a recent year for the major diisions In its cosmetics branch. Total Assets Beginning of Total Assets Sales Incone End of Year Profesaional Consumer products Active cosmetics 4,400 990 2,840 6,540 3,760 2,230 480,060 14,200 2,630 5,670 4,270 11, 330 2,005 6,155 1,000 920 Total 24,115 C4,475 13,490 1. Compute profit margin for each division. Which L'Oreal division has the highest profit margin? 2. Compute Investment turnover for each dlvision. Which L'Oreal division has the best Investment turnover? Complete this quesion by entering your answers in the tabs below RequiredRequired Compute profit margin for each division. Which L'Oreal division has the highest profit margin? (Enter your answers in millions.) Profit Ma Center Active Which L'Oreal division has the Required 1 Required 2>Explanation / Answer
PART-1)
Choose Numerator
/
Choose Denominator
=
Profit Margin
Investment Center
Income
/
Sales
=
Profit Margin
Professional products
990
/
4,400
=
22.50
Consumer products
2,005
/
11,330
=
17.70
Luxury products
1,000
/
6,155
=
16.25
Active cosmetics
480
/
2,230
=
21.52
Which loreal division has the highest profit margin?
Answer: Professional products
PART-2)
Choose Numerator
/
Choose Denominator
=
Investment Turnover
Investment Center
Sales
/
Average assets
=
Investment Turnover
Professional products
4,400
/
2,735
=
1.61
Consumer products
11,330
/
6,105
=
1.86
Luxury products
6,155
/
4,015
=
1.53
Active cosmetics
2,230
/
990
=
2.25
Average assets: (Beginning assets + Ending assets) / 2
Which L’Oreal division has the best investment turnover?
Answer: Active Cosmetics
Choose Numerator
/
Choose Denominator
=
Profit Margin
Investment Center
Income
/
Sales
=
Profit Margin
Professional products
990
/
4,400
=
22.50
Consumer products
2,005
/
11,330
=
17.70
Luxury products
1,000
/
6,155
=
16.25
Active cosmetics
480
/
2,230
=
21.52
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