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 Division Electronic Brokerage Division Investment Banking Division Fee revenue $1,010,000 $1,060,000 $1,030,000 Operating expenses 492,000 390,400 727,600 Invested assets 3,700,000 3,100,000 2,100,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. Required: Question Content Area 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department cost allocations. E.F. Lynch CompanyDivisional Income StatementsFor the Year Ended June 30, 20Y8 Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue $fill in the blank b221f1ff8f7f03a_1 $fill in the blank b221f1ff8f7f03a_2 $fill in the blank b221f1ff8f7f03a_3 Operating expenses fill in the blank b221f1ff8f7f03a_4 fill in the blank b221f1ff8f7f03a_5 fill in the blank b221f1ff8f7f03a_6 Income from operations $fill in the blank b221f1ff8f7f03a_7 $fill in the blank b221f1ff8f7f03a_8 $fill in the blank b221f1ff8f7f03a_9 Question Content Area 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place. Division Profit Margin Investment Turnover ROI Mutual Fund Division fill in the blank 897aecffc070f8c_1% fill in the blank 897aecffc070f8c_2 fill in the blank 897aecffc070f8c_3% Electronic Brokerage Division fill in the blank 897aecffc070f8c_4% fill in the blank 897aecffc070f8c_5 fill in the blank 897aecffc070f8c_6% Investment Banking Division fill in the blank 897aecffc070f8c_7% fill in the blank 897aecffc070f8c_8 fill in the blank 897aecffc070f8c_9% 3. When faced with limited funds for expansion, management should consider an expansion of the Division first.
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 Division Electronic Brokerage Division Investment Banking Division Fee revenue $1,010,000 $1,060,000 $1,030,000 Operating expenses 492,000 390,400 727,600 Invested assets 3,700,000 3,100,000 2,100,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. Required: Question Content Area 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department cost allocations. E.F. Lynch CompanyDivisional Income StatementsFor the Year Ended June 30, 20Y8 Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue $fill in the blank b221f1ff8f7f03a_1 $fill in the blank b221f1ff8f7f03a_2 $fill in the blank b221f1ff8f7f03a_3 Operating expenses fill in the blank b221f1ff8f7f03a_4 fill in the blank b221f1ff8f7f03a_5 fill in the blank b221f1ff8f7f03a_6 Income from operations $fill in the blank b221f1ff8f7f03a_7 $fill in the blank b221f1ff8f7f03a_8 $fill in the blank b221f1ff8f7f03a_9 Question Content Area 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place. Division Profit Margin Investment Turnover ROI Mutual Fund Division fill in the blank 897aecffc070f8c_1% fill in the blank 897aecffc070f8c_2 fill in the blank 897aecffc070f8c_3% Electronic Brokerage Division fill in the blank 897aecffc070f8c_4% fill in the blank 897aecffc070f8c_5 fill in the blank 897aecffc070f8c_6% Investment Banking Division fill in the blank 897aecffc070f8c_7% fill in the blank 897aecffc070f8c_8 fill in the blank 897aecffc070f8c_9% 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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Question
Divisional Income Statements and
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 Division |
Electronic Brokerage Division |
Investment Banking Division |
||||
| Fee revenue | $1,010,000 | $1,060,000 | $1,030,000 | |||
| Operating expenses | 492,000 | 390,400 | 727,600 | |||
| Invested assets | 3,700,000 | 3,100,000 | 2,100,000 |
The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations.
Required:
Question Content Area
1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department cost allocations.
| Mutual Fund Division |
Electronic Brokerage Division |
Investment Banking Division |
|
| Fee revenue | $fill in the blank b221f1ff8f7f03a_1 | $fill in the blank b221f1ff8f7f03a_2 | $fill in the blank b221f1ff8f7f03a_3 |
| Operating expenses | fill in the blank b221f1ff8f7f03a_4 | fill in the blank b221f1ff8f7f03a_5 | fill in the blank b221f1ff8f7f03a_6 |
| Income from operations | $fill in the blank b221f1ff8f7f03a_7 | $fill in the blank b221f1ff8f7f03a_8 | $fill in the blank b221f1ff8f7f03a_9 |
Question Content Area
2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place.
| Division | Profit Margin | Investment Turnover | ROI |
| Mutual Fund Division | fill in the blank 897aecffc070f8c_1% | fill in the blank 897aecffc070f8c_2 | fill in the blank 897aecffc070f8c_3% |
| Electronic Brokerage Division | fill in the blank 897aecffc070f8c_4% | fill in the blank 897aecffc070f8c_5 | fill in the blank 897aecffc070f8c_6% |
| Investment Banking Division | fill in the blank 897aecffc070f8c_7% | fill in the blank 897aecffc070f8c_8 | fill in the blank 897aecffc070f8c_9% |
3. When faced with limited funds for expansion, management should consider an expansion of the
Division first.
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