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 % %
Chapter1: Financial Statements And Business Decisions
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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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