Divisional Income Statements and Return on Investment Analysis E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows: Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue $630,000 $650,000 $640,000 Operating expenses 340,200 308,000 484,000 Invested assets 2,300,000 1,900,000 1,300,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. Required: 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 20Y8 Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue $fill in the blank b15c87fa207dfdd_1 $fill in the blank b15c87fa207dfdd_2 $fill in the blank b15c87fa207dfdd_3 Operating expenses fill in the blank b15c87fa207dfdd_4 fill in the blank b15c87fa207dfdd_5 fill in the blank b15c87fa207dfdd_6 Income from operations $fill in the blank b15c87fa207dfdd_7 $fill in the blank b15c87fa207dfdd_8 $fill in the blank b15c87fa207dfdd_9 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place. Division Profit Margin Investment Turnover ROI Mutual Fund Division fill in the blank 766a64fd9fcf074_1% fill in the blank 766a64fd9fcf074_2 fill in the blank 766a64fd9fcf074_3% Electronic Brokerage Division fill in the blank 766a64fd9fcf074_4% fill in the blank 766a64fd9fcf074_5 fill in the blank 766a64fd9fcf074_6% Investment Banking Division fill in the blank 766a64fd9fcf074_7% fill in the blank 766a64fd9fcf074_8 fill in the blank 766a64fd9fcf074_9% 3. When faced with limited funds for expansion, management should consider an expansion of the Division first.

Divisional Income Statements and Return on Investment Analysis E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows: Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue $630,000 $650,000 $640,000 Operating expenses 340,200 308,000 484,000 Invested assets 2,300,000 1,900,000 1,300,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. Required: 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 20Y8 Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue $fill in the blank b15c87fa207dfdd_1 $fill in the blank b15c87fa207dfdd_2 $fill in the blank b15c87fa207dfdd_3 Operating expenses fill in the blank b15c87fa207dfdd_4 fill in the blank b15c87fa207dfdd_5 fill in the blank b15c87fa207dfdd_6 Income from operations $fill in the blank b15c87fa207dfdd_7 $fill in the blank b15c87fa207dfdd_8 $fill in the blank b15c87fa207dfdd_9 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place. Division Profit Margin Investment Turnover ROI Mutual Fund Division fill in the blank 766a64fd9fcf074_1% fill in the blank 766a64fd9fcf074_2 fill in the blank 766a64fd9fcf074_3% Electronic Brokerage Division fill in the blank 766a64fd9fcf074_4% fill in the blank 766a64fd9fcf074_5 fill in the blank 766a64fd9fcf074_6% Investment Banking Division fill in the blank 766a64fd9fcf074_7% fill in the blank 766a64fd9fcf074_8 fill in the blank 766a64fd9fcf074_9% 3. When faced with limited funds for expansion, management should consider an expansion of the Division first.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter24: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 3PB: Divisional income statements and return on investment analysis E.F. Lynch Company is a diversified...

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Divisional Income Statements and Return on Investment Analysis

E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows:

	Mutual Fund Division	Electronic Brokerage Division	Investment Banking Division
Fee revenue	$630,000		$650,000	$640,000
Operating expenses	340,200		308,000	484,000
Invested assets	2,300,000		1,900,000	1,300,000

The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations.

Required:

1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges.

E.F. Lynch Company
Divisional Income Statements
For the Year Ended June 30, 20Y8
	Mutual Fund Division	Electronic Brokerage Division	Investment Banking Division
Fee revenue	$fill in the blank b15c87fa207dfdd_1	$fill in the blank b15c87fa207dfdd_2	$fill in the blank b15c87fa207dfdd_3
Operating expenses	fill in the blank b15c87fa207dfdd_4	fill in the blank b15c87fa207dfdd_5	fill in the blank b15c87fa207dfdd_6
Income from operations	$fill in the blank b15c87fa207dfdd_7	$fill in the blank b15c87fa207dfdd_8	$fill in the blank b15c87fa207dfdd_9

2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place.

Division	Profit Margin	Investment Turnover	ROI
Mutual Fund Division	fill in the blank 766a64fd9fcf074_1%	fill in the blank 766a64fd9fcf074_2	fill in the blank 766a64fd9fcf074_3%
Electronic Brokerage Division	fill in the blank 766a64fd9fcf074_4%	fill in the blank 766a64fd9fcf074_5	fill in the blank 766a64fd9fcf074_6%
Investment Banking Division	fill in the blank 766a64fd9fcf074_7%	fill in the blank 766a64fd9fcf074_8	fill in the blank 766a64fd9fcf074_9%

3. When faced with limited funds for expansion, management should consider an expansion of the Division first.

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