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Introduction:
Return on Investment (ROI) is a performance measure, which is used to evaluate the efficiency of an investment.It measures the amount of return on an investment, in relation to the investment's cost.
Profit Margin:
Profit margin is a profitability ratio which calculates the relation between net income and sales.
Investment Turnover:
Asset or Investment turnover ratio measures the sales generated by a company relative to the value of its assets. It is used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.
To Calculate:
Requirement 1:
Return on Investment of both divisions
Answer to Problem 12E
Solution:
Beverage Division = 13.28%
Cheese Division = 14.32%
Explanation of Solution
Beverage Division
Cheese Division
Cheese Division has better ROI.
Requirement 2:
Profit Margin of both divisions
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