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 operations Sales 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 = Sales Invested 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 operations Sales × Sales Invested assets = Income from operations Invested assets To compute : Profit margin, investment turnover, and return on investment (ROI), and draft a memo to the president explaining the performance of N Division

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Answer 1

Question

Chapter 23, Problem 23.3TIF

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 compute: Profit margin, investment turnover, and return on investment (ROI), and draft a memo to the president explaining the performance of N Division

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Answer 2

Question

Chapter 23, Problem 23.3TIF

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 compute: Profit margin, investment turnover, and return on investment (ROI), and draft a memo to the president explaining the performance of N Division

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Chapter 23, Problem 23.3TIF

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 compute: Profit margin, investment turnover, and return on investment (ROI), and draft a memo to the president explaining the performance of N Division

Expert Solution & Answer

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Answer 4

Question

Chapter 23, Problem 23.3TIF

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 compute: Profit margin, investment turnover, and return on investment (ROI), and draft a memo to the president explaining the performance of N Division

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 23, Problem 23.3TIF

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 compute: Profit margin, investment turnover, and return on investment (ROI), and draft a memo to the president explaining the performance of N Division

Answer 6

Chapter 23, Problem 23.3TIF

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 compute: Profit margin, investment turnover, and return on investment (ROI), and draft a memo to the president explaining the performance of N Division

Answer 7

Chapter 23, Problem 23.3TIF

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 compute: Profit margin, investment turnover, and return on investment (ROI), and draft a memo to the president explaining the performance of N Division

Answer 8

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Answer 11

Ch. 23 - Prob. 1DQ Ch. 23 - Differentiate between a profit center and an...Ch. 23 - Weyerhaeuser developed a system that assigns...Ch. 23 - What is the major shortcoming of using income from...Ch. 23 - In a decentralized company in which the divisions...Ch. 23 - How does using the return on investment facilitate...Ch. 23 - Why would a firm use a balanced scorecard in...Ch. 23 - Prob. 8DQ Ch. 23 - When is the negotiated price approach preferred...Ch. 23 - When using the negotiated price approach to...

Solution Summary: The author explains how to calculate profit margin, investment turnover, and return on investment (ROI) and prepare a memo to the controller.

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