
1.
To compute: Profit margin.
1.

Explanation of Solution
Formula to calculate profit margin,
Professional products:
Given,
Net income is €552.
Total revenue is €2,717.
Substitute, €552 for net income and €2,717 for total revenue in the above equation (1).
Hence, profit margin is 20.31%.
Consumer products:
Given,
Net income is €1,765.
Total revenue is €9.530.
Substitute, €1,765 for net income and €9,530 for total revenue in the above equation (1).
Hence, profit margin is 18.52%.
Luxury products:
Given,
Net income is €791.
Total revenue is €4,507.
Substitute, €791 for net income and €4,507 for total revenue in the above equation (1).
Hence, profit margin is 17.55%.
Active cosmetics:
Given,
Net income is €278.
Total revenue is €1,386.
Substitute, €278 for net income and €1,386 for total revenue in the above equation (1).
Hence, profit margin is 20.05%.
Hence, professional products division has the highest profit margin of 20.31%.
2.
To compute: Investment turnover.
2.

Explanation of Solution
Formula to calculate investment turnover,
Professional products:
Given,
Sales are €2,717.
Average assets invested are €2,570.
Substitute, €2,717 for sales and €2,570 for average assets invested in the above equation (2).
Hence, investment turnover is 1.05.
Working notes:
Calculation for average assets,
Consumer products:
Given,
Sales are €9,530.
Average assets invested are €5,745.
Substitute, €9,530 for sales and €5,745 for average assets invested in the above equation (2).
Hence, investment turnover is 1.65.
Working notes:
Calculation for average assets,
Luxury products:
Given,
Sales are €4,507.
Average assets invested are €3,855.
Substitute, €4,507 for sales and €3,855 for average assets invested in the above equation (2).
Hence, investment turnover is 1.17.
Working notes:
Calculation for average assets,
Active cosmetics:
Given,
Sales are €1,386.
Average assets invested are €823.5.
Substitute, €1,386 for sales and €823.5 for average assets invested in the above equation (2).
Hence, investment turnover is 1.68.
Working notes:
Calculation for average assets,
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Chapter 22 Solutions
GEN COMBO FINANCIAL AND MANAGERIAL ACCOUNTING; CONNECT ACCESS CARD
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