(a)
Profit margin: This ratio gauges the operating profitability by quantifying the amount of income earned from business operations from the sales generated.
Formula of profit margin:
Investment turnover: This ratio gauges the operating efficiency by quantifying the amount of sales generated from the assets invested.
Formula of investment turnover:
Formula of ROI according to Dupont formula:
To determine: Profit margin, investment turnover, and return on investment of CP Division
(b)
Revised profit margin, investment turnover, and revised return on investment of CP Division, if the expenses are reduced by $320,000, and write the impact of reduced expenses on ROI
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FINANCIAL+MANG.-W/ACCESS PRACTICE SET
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