Return on Investment : Return on Investment (ROI) is a performance measure, which is used to evaluate the efficiency of an investment. It measures the amount of return on an investment, in relation to the investment’s cost. Profit Margin: Profit margin is a profitability ratio which calculates the relation between net income and sales. Investment Turnover: Asset or Investment turnover ratio measures the sales generated by a company relative to the value of its assets. It is used as an indicator of the efficiency with which a company is deploying its assets in generating revenue. To Calculate: Requirement 1: Return on Investment of both divisions

Question

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Answer 1

Question

Chapter 24, Problem 12E

To determine

Introduction:

Return on Investment: Return on Investment (ROI) is a performance measure, which is used to evaluate the efficiency of an investment. It measures the amount of return on an investment, in relation to the investment’s cost.

Profit Margin: Profit margin is a profitability ratio which calculates the relation between net income and sales.

Investment Turnover: Asset or Investment turnover ratio measures the sales generated by a company relative to the value of its assets. It is used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.

To Calculate:

Requirement 1: Return on Investment of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.28%

Cheese Division = 14.32%

Explanation of Solution

Beverage Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{349}{2627.5} x 100 \\ = 13.28 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{2662 + 2593}{2} \\ = 2627.5 \end{array}$

Cheese Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{634}{4427.5} x 100 \\ = 14.32 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{4455 + 4400}{2} \\ = 44 27.5 \end{array}$

Conclusion

Cheese Division has better ROI.

To determine

Requirement 2: Profit Margin of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.02%

Cheese Division = 16.15%

Explanation of Solution

Beverage Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{349}{2681} x 100 \\ = 13.02 % \end{array}$

Cheese Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{634}{3925} x 100 \\ = 16.15 % \end{array}$

Conclusion

Cheese Division has better profit margin.

To determine

Requirement 3: Investment Turnover of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 1.02

Cheese Division = 0.89

Explanation of Solution

Beverage Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{2681}{2627.5} \\ = 1.02 \end{array}$

Cheese Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{3925}{4427.5} \\ = 0.89 \end{array}$

Conclusion

Beverage Division has better investment turnover.

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Answer 2

Question

Chapter 24, Problem 12E

To determine

Introduction:

Return on Investment: Return on Investment (ROI) is a performance measure, which is used to evaluate the efficiency of an investment. It measures the amount of return on an investment, in relation to the investment’s cost.

Profit Margin: Profit margin is a profitability ratio which calculates the relation between net income and sales.

Investment Turnover: Asset or Investment turnover ratio measures the sales generated by a company relative to the value of its assets. It is used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.

To Calculate:

Requirement 1: Return on Investment of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.28%

Cheese Division = 14.32%

Explanation of Solution

Beverage Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{349}{2627.5} x 100 \\ = 13.28 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{2662 + 2593}{2} \\ = 2627.5 \end{array}$

Cheese Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{634}{4427.5} x 100 \\ = 14.32 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{4455 + 4400}{2} \\ = 44 27.5 \end{array}$

Conclusion

Cheese Division has better ROI.

To determine

Requirement 2: Profit Margin of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.02%

Cheese Division = 16.15%

Explanation of Solution

Beverage Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{349}{2681} x 100 \\ = 13.02 % \end{array}$

Cheese Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{634}{3925} x 100 \\ = 16.15 % \end{array}$

Conclusion

Cheese Division has better profit margin.

To determine

Requirement 3: Investment Turnover of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 1.02

Cheese Division = 0.89

Explanation of Solution

Beverage Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{2681}{2627.5} \\ = 1.02 \end{array}$

Cheese Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{3925}{4427.5} \\ = 0.89 \end{array}$

Conclusion

Beverage Division has better investment turnover.

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Answer 3

Question

Chapter 24, Problem 12E

To determine

Introduction:

Return on Investment: Return on Investment (ROI) is a performance measure, which is used to evaluate the efficiency of an investment. It measures the amount of return on an investment, in relation to the investment’s cost.

Profit Margin: Profit margin is a profitability ratio which calculates the relation between net income and sales.

Investment Turnover: Asset or Investment turnover ratio measures the sales generated by a company relative to the value of its assets. It is used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.

To Calculate:

Requirement 1: Return on Investment of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.28%

Cheese Division = 14.32%

Explanation of Solution

Beverage Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{349}{2627.5} x 100 \\ = 13.28 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{2662 + 2593}{2} \\ = 2627.5 \end{array}$

Cheese Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{634}{4427.5} x 100 \\ = 14.32 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{4455 + 4400}{2} \\ = 44 27.5 \end{array}$

Conclusion

Cheese Division has better ROI.

To determine

Requirement 2: Profit Margin of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.02%

Cheese Division = 16.15%

Explanation of Solution

Beverage Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{349}{2681} x 100 \\ = 13.02 % \end{array}$

Cheese Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{634}{3925} x 100 \\ = 16.15 % \end{array}$

Conclusion

Cheese Division has better profit margin.

To determine

Requirement 3: Investment Turnover of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 1.02

Cheese Division = 0.89

Explanation of Solution

Beverage Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{2681}{2627.5} \\ = 1.02 \end{array}$

Cheese Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{3925}{4427.5} \\ = 0.89 \end{array}$

Conclusion

Beverage Division has better investment turnover.

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Answer 4

Question

Chapter 24, Problem 12E

To determine

Introduction:

Return on Investment: Return on Investment (ROI) is a performance measure, which is used to evaluate the efficiency of an investment. It measures the amount of return on an investment, in relation to the investment’s cost.

Profit Margin: Profit margin is a profitability ratio which calculates the relation between net income and sales.

Investment Turnover: Asset or Investment turnover ratio measures the sales generated by a company relative to the value of its assets. It is used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.

To Calculate:

Requirement 1: Return on Investment of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.28%

Cheese Division = 14.32%

Explanation of Solution

Beverage Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{349}{2627.5} x 100 \\ = 13.28 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{2662 + 2593}{2} \\ = 2627.5 \end{array}$

Cheese Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{634}{4427.5} x 100 \\ = 14.32 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{4455 + 4400}{2} \\ = 44 27.5 \end{array}$

Conclusion

Cheese Division has better ROI.

To determine

Requirement 2: Profit Margin of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.02%

Cheese Division = 16.15%

Explanation of Solution

Beverage Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{349}{2681} x 100 \\ = 13.02 % \end{array}$

Cheese Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{634}{3925} x 100 \\ = 16.15 % \end{array}$

Conclusion

Cheese Division has better profit margin.

To determine

Requirement 3: Investment Turnover of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 1.02

Cheese Division = 0.89

Explanation of Solution

Beverage Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{2681}{2627.5} \\ = 1.02 \end{array}$

Cheese Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{3925}{4427.5} \\ = 0.89 \end{array}$

Conclusion

Beverage Division has better investment turnover.

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Answer 5

Chapter 24, Problem 12E

To determine

Introduction:

Return on Investment: Return on Investment (ROI) is a performance measure, which is used to evaluate the efficiency of an investment. It measures the amount of return on an investment, in relation to the investment’s cost.

Profit Margin: Profit margin is a profitability ratio which calculates the relation between net income and sales.

Investment Turnover: Asset or Investment turnover ratio measures the sales generated by a company relative to the value of its assets. It is used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.

To Calculate:

Requirement 1: Return on Investment of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.28%

Cheese Division = 14.32%

Explanation of Solution

Beverage Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{349}{2627.5} x 100 \\ = 13.28 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{2662 + 2593}{2} \\ = 2627.5 \end{array}$

Cheese Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{634}{4427.5} x 100 \\ = 14.32 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{4455 + 4400}{2} \\ = 44 27.5 \end{array}$

Conclusion

Cheese Division has better ROI.

To determine

Requirement 2: Profit Margin of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.02%

Cheese Division = 16.15%

Explanation of Solution

Beverage Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{349}{2681} x 100 \\ = 13.02 % \end{array}$

Cheese Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{634}{3925} x 100 \\ = 16.15 % \end{array}$

Conclusion

Cheese Division has better profit margin.

To determine

Requirement 3: Investment Turnover of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 1.02

Cheese Division = 0.89

Explanation of Solution

Beverage Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{2681}{2627.5} \\ = 1.02 \end{array}$

Cheese Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{3925}{4427.5} \\ = 0.89 \end{array}$

Conclusion

Beverage Division has better investment turnover.

Answer 6

Chapter 24, Problem 12E

To determine

Introduction:

Return on Investment: Return on Investment (ROI) is a performance measure, which is used to evaluate the efficiency of an investment. It measures the amount of return on an investment, in relation to the investment’s cost.

Profit Margin: Profit margin is a profitability ratio which calculates the relation between net income and sales.

Investment Turnover: Asset or Investment turnover ratio measures the sales generated by a company relative to the value of its assets. It is used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.

To Calculate:

Requirement 1: Return on Investment of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.28%

Cheese Division = 14.32%

Explanation of Solution

Beverage Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{349}{2627.5} x 100 \\ = 13.28 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{2662 + 2593}{2} \\ = 2627.5 \end{array}$

Cheese Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{634}{4427.5} x 100 \\ = 14.32 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{4455 + 4400}{2} \\ = 44 27.5 \end{array}$

Conclusion

Cheese Division has better ROI.

Answer 7

Chapter 24, Problem 12E

To determine

Introduction:

Return on Investment: Return on Investment (ROI) is a performance measure, which is used to evaluate the efficiency of an investment. It measures the amount of return on an investment, in relation to the investment’s cost.

Profit Margin: Profit margin is a profitability ratio which calculates the relation between net income and sales.

Investment Turnover: Asset or Investment turnover ratio measures the sales generated by a company relative to the value of its assets. It is used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.

To Calculate:

Requirement 1: Return on Investment of both divisions

Answer 8

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.28%

Cheese Division = 14.32%

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Beverage Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{349}{2627.5} x 100 \\ = 13.28 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{2662 + 2593}{2} \\ = 2627.5 \end{array}$

Cheese Division

$\begin{array}{l} R O I = \frac{N e t I n c o m e}{A v e r a g e I n v e s t m e n t i n A s s e t s} x 100 \\ = \frac{634}{4427.5} x 100 \\ = 14.32 % \\ A v e r a g e I n v e s t m e n t i n A s s e t s = \frac{A s s e t s i n b e g i n n i n g + A s s e t s a t e n d}{2} \\ = \frac{4455 + 4400}{2} \\ = 44 27.5 \end{array}$

Answer 13

Conclusion

Cheese Division has better ROI.

Answer 14

To determine

Requirement 2: Profit Margin of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.02%

Cheese Division = 16.15%

Explanation of Solution

Beverage Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{349}{2681} x 100 \\ = 13.02 % \end{array}$

Cheese Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{634}{3925} x 100 \\ = 16.15 % \end{array}$

Conclusion

Cheese Division has better profit margin.

Answer 15

To determine

Requirement 2: Profit Margin of both divisions

Answer 16

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 13.02%

Cheese Division = 16.15%

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

Beverage Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{349}{2681} x 100 \\ = 13.02 % \end{array}$

Cheese Division

$\begin{array}{l} P r o f i t M a r g i n = \frac{N e t I n c o m e}{S a l e s} x 100 \\ = \frac{634}{3925} x 100 \\ = 16.15 % \end{array}$

Answer 21

Conclusion

Cheese Division has better profit margin.

Answer 22

To determine

Requirement 3: Investment Turnover of both divisions

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 1.02

Cheese Division = 0.89

Explanation of Solution

Beverage Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{2681}{2627.5} \\ = 1.02 \end{array}$

Cheese Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{3925}{4427.5} \\ = 0.89 \end{array}$

Conclusion

Beverage Division has better investment turnover.

Answer 23

To determine

Requirement 3: Investment Turnover of both divisions

Answer 24

Expert Solution

Answer to Problem 12E

Solution:

Beverage Division = 1.02

Cheese Division = 0.89

Answer 25

Expert Solution

Answer 26

Expert Solution

Answer 27

Expert Solution

Answer 28

Explanation of Solution

Beverage Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{2681}{2627.5} \\ = 1.02 \end{array}$

Cheese Division

$\begin{array}{l} I n v e s t m e n t T u r n o v e r = \frac{N e t S a l e s}{A v e r a g e A s s e t s} \\ = \frac{3925}{4427.5} \\ = 0.89 \end{array}$