FINANCIAL+MANG.-W/ACCESS  PRACTICE SET
FINANCIAL+MANG.-W/ACCESS PRACTICE SET
13th Edition
ISBN: 9781337575614
Author: WARREN
Publisher: CENGAGE L
Question
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Chapter 23, Problem 23.3BPR

(1)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To prepare: The income statements for MF, EB, and IB Divisions of Company L for the year ended June 30, 2016

(2)

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 determine: Profit margin, investment turnover, and return on investment of MF, EB, and IB Divisions

(3)

To determine

To recommend: The expansion of the profitable division, based on income from operations and ROI, computed in parts (1) and (2).

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Chapter 23 Solutions

FINANCIAL+MANG.-W/ACCESS PRACTICE SET

Ch. 23 - Prob. 23.1APECh. 23 - Prob. 23.1BPECh. 23 - Service department charges The centralized...Ch. 23 - Service department charges The centralized...Ch. 23 - Income from operations for profit center Using the...Ch. 23 - Prob. 23.3BPECh. 23 - Prob. 23.4APECh. 23 - Profit margin, investment turnover, and ROI Briggs...Ch. 23 - Residual income The Consumer Division of Hernandez...Ch. 23 - Prob. 23.5BPECh. 23 - Transfer pricing The materials used by tile North...Ch. 23 - Transfer pricing The materials used by the...Ch. 23 - Budget performance reports for cost centers...Ch. 23 - Divisional income statements The following data...Ch. 23 - Service department charges and activity bases For...Ch. 23 - Prob. 23.4EXCh. 23 - Service department charges In divisional income...Ch. 23 - Service department charges and activity bases...Ch. 23 - Divisional income statements with service...Ch. 23 - Prob. 23.8EXCh. 23 - Prob. 23.9EXCh. 23 - Rate of return on investment The income from...Ch. 23 - Residual income Based on the data in Exercise...Ch. 23 - Determining missing items in return on investment...Ch. 23 - Prob. 23.13EXCh. 23 - Prob. 23.14EXCh. 23 - Prob. 23.15EXCh. 23 - Determining missing items from computations Data...Ch. 23 - Prob. 23.17EXCh. 23 - Prob. 23.18EXCh. 23 - Building a balanced scorecard Hit-n-Run Inc. owns...Ch. 23 - Decision on transfer pricing Materials used by the...Ch. 23 - Prob. 23.21EXCh. 23 - Budget performance report for a cost center...Ch. 23 - Prob. 23.2APRCh. 23 - Divisional income statements and rate of return on...Ch. 23 - Effect of proposals on divisional performance A...Ch. 23 - Prob. 23.5APRCh. 23 - Prob. 23.6APRCh. 23 - Prob. 23.1BPRCh. 23 - Prob. 23.2BPRCh. 23 - Prob. 23.3BPRCh. 23 - Prob. 23.4BPRCh. 23 - Prob. 23.5BPRCh. 23 - Prob. 23.6BPRCh. 23 - Prob. 23.1CPCh. 23 - Prob. 23.2CPCh. 23 - Evaluating divisional performance The three...Ch. 23 - Evaluating division performance over time The...Ch. 23 - Evaluating division performance Last Resort...
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