Asked by Clarise Gindap on May 14, 2024
Verified
The sales, income from operations, and invested assets for each division of Grosbeak Company are as follows: 
(a)Using the DuPont formula, determine the profit margin, investment turnover, and return on investment for each division. Round profit margin percentage to two decimal places, investment turnover to four decimal places, and return on investment to one decimal place.
(b)Which division is the most profitable per dollar invested?
DuPont Formula
A financial analysis formula that breaks down Return on Equity into three parts: operating efficiency, asset use efficiency, and financial leverage.
Investment Turnover
A measure of a company's efficiency in using its assets to generate sales or revenue; calculated by dividing sales by the average invested assets.
Profit Margin
A financial ratio that measures the percentage of profit a company makes for each dollar of sales.
- Acquire knowledge of and implement the DuPont formula in assessing investment profitability.
- Determine and explain the concepts of profit margin, investment turnover, and return on investment.
- Identify the highest earning division through the analysis of financial indicators.
Verified Answer
BK
(b)Division F is the most profitable.
Learning Objectives
- Acquire knowledge of and implement the DuPont formula in assessing investment profitability.
- Determine and explain the concepts of profit margin, investment turnover, and return on investment.
- Identify the highest earning division through the analysis of financial indicators.