Divisional Income Statements and Return on Investment Analysis E.F. Lynch Company is a diversified investment company...
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Divisional Income Statements and Return on Investment Analysis E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows: Fee revenue Mutual Fund Division $1,200,000 $1,270,000 584,000 537,400 4,400,000 3,700,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. Operating expenses Invested assets Required: Fee revenue 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations. E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 20Y8 Operating expenses Operating income Electronic Brokerage Division Mutual Electronic Investment Fund Brokerage Banking Division Division Division $ Investment Banking Division $1,180,000 834,400 2,400,000 100 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place. Division Mutual Fund Division Electronic Brokerage Division Investment Banking Division 3. When faced with limited funds for expansion, management should consider an expansion of the Investment Banking Profit Margin % % Investment Turnover ROI % Division first. Divisional Income Statements and Return on Investment Analysis E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows: Fee revenue Mutual Fund Division $1,200,000 $1,270,000 584,000 537,400 4,400,000 3,700,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. Operating expenses Invested assets Required: Fee revenue 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations. E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 20Y8 Operating expenses Operating income Electronic Brokerage Division Mutual Electronic Investment Fund Brokerage Banking Division Division Division $ Investment Banking Division $1,180,000 834,400 2,400,000 100 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place. Division Mutual Fund Division Electronic Brokerage Division Investment Banking Division 3. When faced with limited funds for expansion, management should consider an expansion of the Investment Banking Profit Margin % % Investment Turnover ROI % Division first.
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1 Fees revenue Operating Expenses Operating Income 2 EF Lynch company Divisional income statement ... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-1285866307
13th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
Posted Date:
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