(a)
Concept Introduction:
Return on investment represents the investment returns in regard to revenues. It is used to determine whether the investments are making loss or profit. In other words, the benefit or return from the original cost of investment is termed as return on investment.
The return on investment for the four W.D. Co. sectors using the DuPont formula.
(b)
Concept Introduction:
Rate of return on investment represents the investment performance. It is beneficial for investor to compare different investments and select best investment. The benefit or return from the original cost of investment is return on investment.
The reason for thedifference in the four sectors in terms of profit margin, investment turnover, and return on investment.
Want to see the full answer?
Check out a sample textbook solutionChapter 14 Solutions
Survey of Accounting (Accounting I)
- Segment Analysis for a Service Company Charles Schwab Corporation is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as follows (in millions): Investor Advisor Services Services Revenues $7,321 $2,811 Income from operations 3,176 1,386 Depreciation 186 120 a. The ____ segment serves the retail customer, you and me. These include brokerage, Internet, and mutual fund services. The ____ segment includes the same services provided for financial institutions, such as banks, mutual fund managers, insurance companies, and pension plan administrators. b. Indicate whether the following costs are a “Variable Cost” or a “Fixed Cost” in the “Investor Services“. 1. Commissions to brokers _____2. Fees paid to exchanges for executing trades_____ 3. Depreciation on brokerage offices _______4. Transaction fees incurred by Schwab mutual funds to…arrow_forwardSegment Contribution Margin Analysis The Walt Disney Company (DIS) is a global entertainment company that is organized into four business segments as follows: Media Networks:Television production and distribution, including ABC television network, ESPN, National Geographic. Parks, Experiences, and Products:Theme parks and resorts, including Walt Disney World and Disneyland; Experiences, including Disney Cruise Line and Disney Vacation Club; Products, including Disney and Pixar characters, comic books, and magazines. Studio Entertainment:Music and motion picture production and distribution, including Twentieth Century Studios, Marvel, and Lucasfilm. Direct-to-Consumer & International:Streaming services, including Disney+, ESPN+, and Hulu. For a recent year, Disney reported the following segment results (in millions): Line Item Description SegmentMediaNetworks SegmentParks, Experiences,and Products SegmentEntertainment Direct-to-Consumer& International Revenues $28,393…arrow_forwardSegment analysis for a service company Charles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as follows (in millions): InvestorServices AdvisorServices Revenues $5,411 $2,067 Operating income 2,031 962 Depreciation 180 54 a. The Investor Services segment serves the retail customer, you and me. These are the brokerage, Internet, and mutual fund services used by individual Investors. The Advisor Services segment includes the same services provided for financial institutions, such as banks, mutual fund managers, insurance companies, and pension plan administrators. b. Indicate whether the following costs are a “Variable Cost” or a “Fixed Cost” in the “Investor Services” segment. 1. Commissions to brokers Variable Cost 2. Fees paid to exchanges for executing trades Variable Cost 3. Depreciation on brokerage…arrow_forward
- Segment analysis for a service company Charles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as follows (in millions): InvestorServices AdvisorServices Revenues $5,411 $2,067 Operating income 2,031 962 Depreciation 180 54 a. The segment serves the retail customer, you and me. These are the brokerage, Internet, and mutual fund services used by individual Investors. The segment includes the same services provided for financial institutions, such as banks, mutual fund managers, insurance companies, and pension plan administrators. b. Indicate whether the following costs are a “Variable Cost” or a “Fixed Cost” in the “Investor Services” segment. 1. Commissions to brokers 2. Fees paid to exchanges for executing trades 3. Depreciation on brokerage offices 4. Transaction fees incurred by Schwab mutual funds…arrow_forwardDesign of Strategic Business Unit MetroBank is a fast-growing bank that serves theregion around Jacksonville, Florida. The bank provides commercial and individual banking services, including investment and mortgage banking services. The firm’s strategy is to continueto grow by acquiring smaller banks in the area to broaden the base and variety of services it canoffer. The bank now has 87 strategic business units, which represent different areas of servicein different locations. To support its growth, MetroBank has invested several million dollarsin upgrading its information services function. The number of networked computers and ofsupport personnel has more than doubled in the last 4 years and now accounts for 13% of totaloperating expenses. Two years ago, MetroBank decided to charge information services to theSBUs based on the head count (number of employees) in each SBU. Recently, some of thelarger SBUs have complained that this method overcharges them and that some of the…arrow_forwardEffects of Changes in Profits and Assets on Return on Investment (ROI) Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as needed, are evaluated based largely on return on investment (ROI). The company’s Springfield Club reported the following results for the past year: Required: The following questions are to be considered independently. Carry out all computations to two decimal places. 1. Compute the Springfield club’s return on investment (ROI). 2. Assume that the manager of the club is able to increase sales by $70,000 and that, as a result, net operating income increases by $18,200. Further assume that this is possible without any increase in average operating assets. What would be the club’s return on investment (ROI)? 3. Assume that the manager of the club is able to reduce expenses by $14,000 without any change in sales or average operating assets. What would be the club’s return on investment (ROI)? 4.…arrow_forward
- As consultants in advisory services, we are hired by Sayko Corp to help analyze its regional operations in the contiguous U.S. Sayko wishes to draw on our expertise in financial statement analysis to help identify further expansion of operations. Please complete the following with the information on the map (image). 1. Compute profit margin for each region.3. Compute return on total assets for each region.arrow_forwardRequired information Skip to question [The following information applies to the questions displayed below.] CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below: Sales $ 4,980,000 Net operating income $ 298,800 Average operating assets $ 830,000 The following questions are to be considered independently. Required: 1. Compute the company's return on investment (ROI). (Do not round intermediate calculations. Round your answer to 2 decimal places.) Return on investment (ROI) %arrow_forwardAnalyze The Walt Disney Company by segment The Walt Disney Company (DIS) is a leading worldwide entertainment company. Disney operates four business segments. These segments and some of their larger businesses are: Media Networks: ABC Network, ESPN, Disney Channel, and A&E Parks and Resorts: Walt Disney World Resort, Disneyland, and International Disney Resorts Studio Entertainment: Walt Disney Pictures, Pixar, Marvel, and Lucasfilm Consumer Products and Interactive Media: Licensing of Disney characters, publishing, and retail stores Recent comparative revenues for the four segments are as follows (in millions):arrow_forward
- The income statement comparison for Rush Delivery Company shows the income statement for the current and prior year. A. Determine the operating income (loss) (dollars) for each year. B. Determine the operating income (percentage) for each year. C. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the ROI. Was the decision to invest additional assets in the company successful? Explain. D. Assuming an 8% cost of capital, calculate the RI for each year. Explain how this compares to your findings in part C.arrow_forwardCommodore Entertainment has four profitable business segments, described as follows: • Media Networks: Television and radio • Parks and Resorts: Resorts, including Commodore land • Studio Entertainment: Motion pictures, musical recordings, and stage plays • Consumer Products: Character merchandising, Commodore stores, books, and magazines Commodore Entertainment recently reported sector income from operations, revenue, and invested assets as follows: Income from Operations Revenue Invested Assets Media Networks $146,640 $624,000 $780,000 Parks and Resorts 41,756 343,200 572,000 Studio Entertainment 13,392 260,400 372,000 Consumer Products 94,163 324,700 191,000 a. Use the DuPont formula to determine the return on investment for the four Commodore Entertainment sectors. Round Profit Margin and ROI to one decimal place and Investment Turnover to two decimal places. Profit Margin Investment Turnover ROI Media Networks fill…arrow_forwardAnalyze Comcast Corporation by segment Comcast Corporation (CMCSA) is a global media and entertainment company with operations divided into five major segments: Cable Communications (XFINITY) Cable Networks (USA Network, Syfy, E!, CNBC, others) Broadcast Television (NBC) Filmed Entertainment (Universal Pictures) Theme Parks (Universal) Revenue, operating income, and depreciation and amortization information for these segments for a recent year are as follows (in millions): Segment Revenue OperatingIncome Depreciationand Amortization Cable Communications $50,048 $12,439 $7,670 Cable Networks 10,464 2,964 745 Broadcast Television 10,147 1,195 125 Filmed Entertainment 6,360 650 47 Theme Parks 4,946 1,678 512 Total $81,965 $18,926 $9,099 a. Prepare a vertical analysis of the segment revenues to total revenues. Round to nearest whole percent. Enter amounts in millions.…arrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeAccounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,