Chapter 9, Problem 3TIF

Communication

The Norse Division of Gridiron Concepts Inc. experienced significant revenue and profit growth from 20Y4 to 20Y6 as shown in the following divisional income statements:

Gridiron Concepts Inc. Divisional Income Statements, Norse Division For the Three Years Ended December 31, 20Y6
	20Y4	20Y5	20Y6
Sales	$1,470,000	$2,100,000	$2,450,000
Cost of goods sold	1,064,000	1,498,000	1,680,000
Gross profit	$ 406,000	$ 602,000	$ 770,000
Operating expenses	185,500	224,000	231,000
Income from operations	$ 220,500	$ 378,000	$ 539,000
Invested assets	$ 735,000	$ 1,500,000	$3,500,000

There are no service department charges, and the division operates as an investment center that must maintain a 15% return on invested assets.

Determine the profit margin, investment turnover, and return on investment for the Norse Division for 20Y4-20Y6. Based on your calculations, write a brief memo to the president of Gridiron Concepts Inc., Knute Holz evaluating the division's performance.