Problem: Alpha Company would like to examine the sales margin and asset turnover components of return on investment for three of its divisions and has accordingly prepared the following information
|
Division
|
Investment
|
Division Operating Income
|
Sales
|
|
E
|
$575,000
|
$75,000
|
$500,000
|
|
F
|
700,000
|
91,000
|
542,000
|
|
G
|
1,000,000
|
176,000
|
763,000
|
a. Compute each division’s return on investment, sales margin, and asset turnover
b. Comment on the divisions’ relative rankings on the rations computed in (a)