Question

Gray Corp. has three divisions that are classified as invest- ment centers. Selected financial information about the each division follows.
Required:
(a) Calculate the return on investment for each division. How would you rank the divisions in terms of levels of performance?
(b) Calculate the profit margin and asset turnover for each division. How would you rank the divisions in terms of levels of performance?
(c) Assume that the manager of Division 1 was new to her job. She has found that the previous man- ager did not dispose of approximately $4,800,000of assets that were no longer being used by the division to manufacture products. Exclude these assets from the asset base and recalculate the asset turnover and return on investment for Division 1. Does this information affect your rankings of the division’s performance? Explain.


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  • CreatedMarch 27, 2015
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