Compute profit margin for each division. (Enter your answers in millions.) Compu

Question

Compute profit margin for each division. (Enter your answers in millions.)

       

Compute investment turnover for each division. (Enter your answers in millions.)

         

L’Oréal reports the following for a recent year for the major divisions in its cosmetics branch. L'Oréal reports the following for a recent year for the major divisions in its cosmetics branch. Total Assets End of Year Total Assets Beginning of Year 2,700 5,810 4,410 millions) Sales Income Consumer products Luxury products Active cosmetics Professional products 5,450 1,2702,980 12,380 7,205 2,790 2,145 1,140 620 6,890 3,830 1,200 990 Total 27,825 5,175 14,900 13,910 1.1 Compute profit margin for each division. (Enter your answers in millions.) Choose Denominato Profit Margin = | Profit Margin Choose Numerator: Investment Center Professional products Consumer products Luxury products Active cosmetics 1.2 Which L'Oreal division has the highest profit margin? Consumer products O Luxury products Professional products OActive cosmetics 2.1 Compute investment turnover for each division. (Enter your answers in millions.) Choose Numerator: | 1 | Choose Denominator: | = Investment Turnover Investment Center Professional products Consumer products Luxury products Active cosmetics Investment Turnover

Explanation / Answer

Solution:

1.1) Profit Margin for each division

Choose Numerator:

/

Choose Denominator

=

Profit Margin

Investment Center

Net Income

/

Sales

=

Profit Margin

  Professional products

1,270

/

5,450

=

23.3%

  Consumer products

2,145

/

12,380

=

17.3%

  Luxury products

1,140

/

7,205

=

15.8%

  Active cosmetics

620

/

2,790

=

22.2%

1.2) Professional Products Division has the highest profit margin.

2.1) Investment Turnover

Choose Numerator:

/

Choose Denominator

=

Investment Turnover

Investment Center

Sales

/

Average Total Assets

(Refer Note 1)

=

Investment Turnover

  Professional products

5,450

/

2840

=

1.92

  Consumer products

12,380

/

6350

=

1.95

  Luxury products

7,205

/

4120

=

1.75

  Active cosmetics

2,790

/

1095

=

2.55

Note 1 --- Calculation of Average Total Asset

(€ millions)

Total Assets

Total Assets

Average Total Assets

End of Year

Beginning of Year

(A)

(B)

(A+B)/2

  Professional products

2,980

2,700

2840

  Consumer products

6,890

5,810

6350

  Luxury products

3,830

4,410

4120

  Active cosmetics

1,200

990

1095

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Choose Numerator:

/

Choose Denominator

=

Profit Margin

Investment Center

Net Income

/

Sales

=

Profit Margin

  Professional products

1,270

/

5,450

=

23.3%

  Consumer products

2,145

/

12,380

=

17.3%

  Luxury products

1,140

/

7,205

=

15.8%

  Active cosmetics

620

/

2,790

=

22.2%

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