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: Profit margin = Income from operations Sales Investment turnover : This ratio gauges the operating efficiency by quantifying the amount of sales generated from the assets invested. Formula of investment turnover: Investment turnover = Sales Invested assets Return on investment (ROI) : This financial ratio evaluates how efficiently the assets are used in earning income from operations. So, ROI is a tool used to measure and compare the performance of a units or divisions or a companies. Formula of ROI according to Dupont formula: Return on investment = Profit margin × Investment turnover = Income from operations Sales × Sales Invested assets = Income from operations Invested assets To compute : Profit margin of each of the segments

Question

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Answer 1

Question

Chapter 9, Problem 1ADM

A.

To determine

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:

$Profit margin=Income from operationsSales$

Investment turnover: This ratio gauges the operating efficiency by quantifying the amount of sales generated from the assets invested.

Formula of investment turnover:

$Investment turnover=SalesInvested assets$

Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in earning income from operations. So, ROI is a tool used to measure and compare the performance of a units or divisions or a companies.

Formula of ROI according to Dupont formula:

$Return on investment = Profit margin × Investment turnover=Income from operationsSales×SalesInvested assets=Income from operationsInvested assets$

To compute: Profit margin of each of the segments

B.

To determine

To discuss: The reason as to why the profit margin of F Segment is larger comparatively

C.

To determine

Investment turnover of each of the segments

D.

To determine

ROI of each of the segments using Dupont formula

E.

To determine

To explain: The source of revenue for M Segment

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Answer 2

Question

Chapter 9, Problem 1ADM

A.

To determine

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:

$Profit margin=Income from operationsSales$

Investment turnover: This ratio gauges the operating efficiency by quantifying the amount of sales generated from the assets invested.

Formula of investment turnover:

$Investment turnover=SalesInvested assets$

Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in earning income from operations. So, ROI is a tool used to measure and compare the performance of a units or divisions or a companies.

Formula of ROI according to Dupont formula:

$Return on investment = Profit margin × Investment turnover=Income from operationsSales×SalesInvested assets=Income from operationsInvested assets$

To compute: Profit margin of each of the segments

B.

To determine

To discuss: The reason as to why the profit margin of F Segment is larger comparatively

C.

To determine

Investment turnover of each of the segments

D.

To determine

ROI of each of the segments using Dupont formula

E.

To determine

To explain: The source of revenue for M Segment

Expert Solution & Answer

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Answer 3

Question

Chapter 9, Problem 1ADM

A.

To determine

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:

$Profit margin=Income from operationsSales$

Investment turnover: This ratio gauges the operating efficiency by quantifying the amount of sales generated from the assets invested.

Formula of investment turnover:

$Investment turnover=SalesInvested assets$

Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in earning income from operations. So, ROI is a tool used to measure and compare the performance of a units or divisions or a companies.

Formula of ROI according to Dupont formula:

$Return on investment = Profit margin × Investment turnover=Income from operationsSales×SalesInvested assets=Income from operationsInvested assets$

To compute: Profit margin of each of the segments

B.

To determine

To discuss: The reason as to why the profit margin of F Segment is larger comparatively

C.

To determine

Investment turnover of each of the segments

D.

To determine

ROI of each of the segments using Dupont formula

E.

To determine

To explain: The source of revenue for M Segment

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 1ADM

A.

To determine

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:

$Profit margin=Income from operationsSales$

Investment turnover: This ratio gauges the operating efficiency by quantifying the amount of sales generated from the assets invested.

Formula of investment turnover:

$Investment turnover=SalesInvested assets$

Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in earning income from operations. So, ROI is a tool used to measure and compare the performance of a units or divisions or a companies.

Formula of ROI according to Dupont formula:

$Return on investment = Profit margin × Investment turnover=Income from operationsSales×SalesInvested assets=Income from operationsInvested assets$

To compute: Profit margin of each of the segments

B.

To determine

To discuss: The reason as to why the profit margin of F Segment is larger comparatively

C.

To determine

Investment turnover of each of the segments

D.

To determine

ROI of each of the segments using Dupont formula

E.

To determine

To explain: The source of revenue for M Segment

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 9, Problem 1ADM

A.

To determine

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:

$Profit margin=Income from operationsSales$

Investment turnover: This ratio gauges the operating efficiency by quantifying the amount of sales generated from the assets invested.

Formula of investment turnover:

$Investment turnover=SalesInvested assets$

Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in earning income from operations. So, ROI is a tool used to measure and compare the performance of a units or divisions or a companies.

Formula of ROI according to Dupont formula:

$Return on investment = Profit margin × Investment turnover=Income from operationsSales×SalesInvested assets=Income from operationsInvested assets$

To compute: Profit margin of each of the segments

B.

To determine

To discuss: The reason as to why the profit margin of F Segment is larger comparatively

C.

To determine

Investment turnover of each of the segments

D.

To determine

ROI of each of the segments using Dupont formula

E.

To determine

To explain: The source of revenue for M Segment

Answer 6

Chapter 9, Problem 1ADM

A.

To determine

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:

$Profit margin=Income from operationsSales$

Investment turnover: This ratio gauges the operating efficiency by quantifying the amount of sales generated from the assets invested.

Formula of investment turnover:

$Investment turnover=SalesInvested assets$

Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in earning income from operations. So, ROI is a tool used to measure and compare the performance of a units or divisions or a companies.

Formula of ROI according to Dupont formula:

$Return on investment = Profit margin × Investment turnover=Income from operationsSales×SalesInvested assets=Income from operationsInvested assets$

To compute: Profit margin of each of the segments

Answer 7

Chapter 9, Problem 1ADM

A.

To determine

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:

$Profit margin=Income from operationsSales$

Investment turnover: This ratio gauges the operating efficiency by quantifying the amount of sales generated from the assets invested.

Formula of investment turnover:

$Investment turnover=SalesInvested assets$

Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in earning income from operations. So, ROI is a tool used to measure and compare the performance of a units or divisions or a companies.

Formula of ROI according to Dupont formula:

$Return on investment = Profit margin × Investment turnover=Income from operationsSales×SalesInvested assets=Income from operationsInvested assets$

To compute: Profit margin of each of the segments

Answer 8

B.

To determine

To discuss: The reason as to why the profit margin of F Segment is larger comparatively

Answer 9

B.

To determine

To discuss: The reason as to why the profit margin of F Segment is larger comparatively

Answer 10

C.

To determine

Investment turnover of each of the segments

Answer 11

C.

To determine

Investment turnover of each of the segments

Answer 12

D.

To determine

ROI of each of the segments using Dupont formula

Answer 13

D.

To determine

ROI of each of the segments using Dupont formula

Answer 14

E.

To determine

To explain: The source of revenue for M Segment

Answer 15

E.

To determine

To explain: The source of revenue for M Segment

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 9 - Differentiate between centralized and...Ch. 9 - Differentiate between a profit center and an...Ch. 9 - Prob. 3DQ Ch. 9 - What is the major shortcoming of using operating...Ch. 9 - In a decentralized company in which the divisions...Ch. 9 - How does using the return on investment facilitate...Ch. 9 - Prob. 7DQ Ch. 9 - Prob. 8DQ Ch. 9 - Prob. 9DQ Ch. 9 - When using the negotiated price approach to...

Solution Summary: The author explains the formula of return on investment (ROI), which gauges the operating profitability by quantifying the amount of income earned from business operations.

To discuss: The reason as to why the profit margin of F Segment is larger comparatively

Investment turnover of each of the segments

ROI of each of the segments using Dupont formula

To explain: The source of revenue for M Segment

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Chapter 9 Solutions