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Profit margin, investment turnover, and return on investment The condensed income statement for the Consumer Products Division of Hydra Industries Inc. is as follows (assuming no support department allocations): Sales Cost of goods sold Gross profit Administrative expenses $265,000,000 (142,500,000) $122,500,000 (80,100,000) Operating income $42,400,000 The manager of the Consumer Products Division is considering ways to increase the return on investment. a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $106,000,000 of assets have been invested in the Consumer Products Division. If required, round your answers to one decimal place. Profit margin Investment turnover % Return on investment b. If expenses could be reduced by $5,300,000 without decreasing sales, what would be the impact on the profit margin, investment turnover, and return on investment for the Consumer Products Division? If required, round your answers to one decimal place. Profit margin Investment turnover Return on investment % %

Profit margin, investment turnover, and return on investment The condensed income statement for the Consumer Products Division of Hydra Industries Inc. is as follows (assuming no support department allocations): Sales Cost of goods sold Gross profit Administrative expenses $265,000,000 (142,500,000) $122,500,000 (80,100,000) Operating income $42,400,000 The manager of the Consumer Products Division is considering ways to increase the return on investment. a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $106,000,000 of assets have been invested in the Consumer Products Division. If required, round your answers to one decimal place. Profit margin Investment turnover % Return on investment b. If expenses could be reduced by $5,300,000 without decreasing sales, what would be the impact on the profit margin, investment turnover, and return on investment for the Consumer Products Division? If required, round your answers to one decimal place. Profit margin Investment turnover Return on investment % %

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Profit margin, investment turnover, and return on investment The condensed income statement for the Consumer Products Division of Hydra Industries Inc. is as follows (assuming no support department allocations): Sales Cost of goods sold Gross profit Administrative expenses $265,000,000 (142,500,000) $122,500,000 (80,100,000) Operating income $42,400,000 The manager of the Consumer Products Division is considering ways to increase the return on investment. a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $106,000,000 of assets have been invested in the Consumer Products Division. If required, round your answers to one decimal place. Profit margin Investment turnover % Return on investment b. If expenses could be reduced by $5,300,000 without decreasing sales, what would be the impact on the profit margin, investment turnover, and return on investment for the Consumer Products Division? If required, round your answers to one decimal place. Profit margin Investment turnover Return on investment % %
Transcribed Image Text:Profit margin, investment turnover, and return on investment The condensed income statement for the Consumer Products Division of Hydra Industries Inc. is as follows (assuming no support department allocations): Sales Cost of goods sold Gross profit Administrative expenses $265,000,000 (142,500,000) $122,500,000 (80,100,000) Operating income $42,400,000 The manager of the Consumer Products Division is considering ways to increase the return on investment. a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $106,000,000 of assets have been invested in the Consumer Products Division. If required, round your answers to one decimal place. Profit margin Investment turnover % Return on investment b. If expenses could be reduced by $5,300,000 without decreasing sales, what would be the impact on the profit margin, investment turnover, and return on investment for the Consumer Products Division? If required, round your answers to one decimal place. Profit margin Investment turnover Return on investment % %
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