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ACC - Prepare a return on investment analysis for the regional manager of Out-and-In Burgers

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Question;You must prepare a return on investment analysis for the regional manager of Out-and-In Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires a $500,000 investment and is expected to yield annual net income of $70,000. The second location (B) requires a $200,000 investment and is expected to yield annual net income of $38,000.Compute the return on investment for each Out-and-In Burgers alternative. (Omit the "%" sign in your response.)Location Return onInvestmentLocation A %Location B %Comart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center).Investment Center Sales NetIncome AverageInvested AssetsElectronics $ 11,100,000 $ 688,500 $ 4,050,000 Sporting goods 7,900,000 880,000 5,500,000 (1.1) Compute return on investment for each department. (Do not round your intermediate calculations and round your final answers to the nearest whole percentages. Omit the "%" sign in your response.)Return on InvestmentElectronics %Sporting goods %(1.2) Using return on investment, which department is most efficient at using assets to generate returns for the company?ElectronicsSporting goods(2.1) Assume a target income level of 12.7% of average invested assets. Compute residual income for each department. (Omit the "$" sign in your response.)Electronics Sporting goodsResidual income $ $(2.2) Which department generated the most residual income for the company?Sporting goodsElectronics(3) Assume that the Electronics department is presented with a new investment opportunity that will yield a 14.8% return on assets. (Assume a target income level of 12.7% of average invested assets.) Should the new investment opportunity be accepted?RejectAcceptL?Oreal reports the following for a recent year for the major divisions in its Cosmetics branch.(? millions) Sales Income Total AssetsEnd of YearTotal AssetsBeginning of YearProfessional products ? 2,572 ? 509 ? 2,316 ? 2,240 Consumer products 8,375 1,558 5,296 5,161 Luxury products 4,190 746 3,859 2,495 Active cosmetics 1,309 269 617 618 Total ? 16,446 ? 3,082 ? 12,088 ? 10,514 1.1 Compute profit margin for each division. (Round your answers to 2 decimal places. Omit the "%" sign in your response.)Investment Center Profit marginProfessional products %Consumer products %Luxury products %Active cosmetics %1.2Which L?Oreal division has the highest profit margin?Active cosmeticsConsumer productsProfessional productsLuxury products2.1 Compute investment turnover for each division. (Do not round intermediate calculations and round your final answers to 2 decimal places.)Investment Center Investment turnoverProfessional products Consumer products Luxury products Active cosmetics 2.2Which L?Oreal division has the best investment turnover?Luxury productsActive cosmeticsProfessional productsConsumer products

 

Paper#42126 | Written in 18-Jul-2015

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