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Divisional Income Statements and Return on Investment Analysis E.F. Lynch Company is a diversified investment company...

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:


Mutual Fund
Division		 Electronic
Brokerage
Division		 Investment
Banking
Division
Fee revenue $740,000 $790,000 $740,000
Operating expenses 399,800 376,000 560,000
Invested assets 2,700,000 2,300,000 1,500,000

The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations.

Required:

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
Mutual
Fund
Division		 Electronic
Brokerage
Division		 Investment
Banking
Division
Fee revenue $ $ $
Operating expenses
Operating income $ $ $

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 Profit Margin Investment Turnover ROI
Mutual Fund Division % %
Electronic Brokerage Division % %
Investment Banking Division % %

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ekkarill92 answered 2 years ago
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