1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 20Y8 Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue Operating expenses Income from operations 2. Using the DuPont formula for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investment for each division. Round your answe to one decimal place. Division Profit Margin Investment Turnover ROI Mutual Fund Division % Electronic Brokerage Division % % Investment Banking Division % % 3. When faced with limited funds for expansion, management should consider an expansion of the Division first.
1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 20Y8 Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue Operating expenses Income from operations 2. Using the DuPont formula for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investment for each division. Round your answe to one decimal place. Division Profit Margin Investment Turnover ROI Mutual Fund Division % Electronic Brokerage Division % % Investment Banking Division % % 3. When faced with limited funds for expansion, management should consider an expansion of the Division first.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Divisional Income Statements and Return on Investment Analysis
E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions
for the year ended June 30, 20Y8, are as follows:
Mutual Fund
Electronic Brokerage
Investment Banking
Division
Division
Division
Fee revenue
$960,000
$990,000
$930,000
Operating
470,000
415,800
656,400
expenses
Invested assets
3,500,000
2,900,000
1,900,000
The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa94b7902-bfcb-4233-91d6-5ecabafd777c%2F7d9c9d82-c190-40d3-b374-16c1d3a460f6%2Fh2jqki_processed.png&w=3840&q=75)
Transcribed Image Text:Divisional Income Statements and Return on Investment Analysis
E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions
for the year ended June 30, 20Y8, are as follows:
Mutual Fund
Electronic Brokerage
Investment Banking
Division
Division
Division
Fee revenue
$960,000
$990,000
$930,000
Operating
470,000
415,800
656,400
expenses
Invested assets
3,500,000
2,900,000
1,900,000
The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations.
![Required:
1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges.
E.F. Lynch Company
Divisional Income Statements
For the Year Ended June 30, 20Y8
Mutual Fund Division
Electronic Brokerage Division
Investment Banking Division
Fee revenue
Operating expenses
Income from operations
$
2. Using the DuPont formula for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investment for each division. Round your answers
to one decimal place.
Division
Profit Margin
Investment Turnover
ROI
Mutual Fund Division
%
%
Electronic Brokerage Division
%
Investment Banking Division
%
%
3. When faced with limited funds for expansion, management should consider an expansion of the
Division first.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa94b7902-bfcb-4233-91d6-5ecabafd777c%2F7d9c9d82-c190-40d3-b374-16c1d3a460f6%2Fk2sllr_processed.png&w=3840&q=75)
Transcribed Image Text:Required:
1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges.
E.F. Lynch Company
Divisional Income Statements
For the Year Ended June 30, 20Y8
Mutual Fund Division
Electronic Brokerage Division
Investment Banking Division
Fee revenue
Operating expenses
Income from operations
$
2. Using the DuPont formula for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investment for each division. Round your answers
to one decimal place.
Division
Profit Margin
Investment Turnover
ROI
Mutual Fund Division
%
%
Electronic Brokerage Division
%
Investment Banking Division
%
%
3. When faced with limited funds for expansion, management should consider an expansion of the
Division first.
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