E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers....
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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 Operating expenses Invested assets Mutual Fund Division Required: $820,000 442,000 Electronic Brokerage Division $850,000 400,000 2,500,000 Investment Banking Division $790,000 598,000 3,000,000 1,600,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 20Y8 Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue Operating expenses Income from operations 2. Using the DuPont formula for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investment for each division. Round your answers to one decimal place. Division Mutual Fund Division Profit Margin % Electronic Brokerage Division Investment Banking Division 3. When faced with limited funds for expansion, management should consider an expansion of the % Investment Turnover % ROI % % % Division first. 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 Operating expenses Invested assets Mutual Fund Division Required: $820,000 442,000 Electronic Brokerage Division $850,000 400,000 2,500,000 Investment Banking Division $790,000 598,000 3,000,000 1,600,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 20Y8 Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue Operating expenses Income from operations 2. Using the DuPont formula for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investment for each division. Round your answers to one decimal place. Division Mutual Fund Division Profit Margin % Electronic Brokerage Division Investment Banking Division 3. When faced with limited funds for expansion, management should consider an expansion of the % Investment Turnover % ROI % % % Division first.
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Related Book For
Managerial Accounting
ISBN: 978-1285866307
13th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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