Explain the reason for the decrease in roi between two years

Assignment Help Financial Accounting

Reference no: EM13902912

Profit margin and investment turnover ratio computations. The Striped Chocolate Division of the International Confection Company had a rate of return on investment (ROI) of 12 percent (¼ $1,200,000/$10,000,000) during Year 7, based on sales of $20,000,000. In an effort to improve its performance during Year 8, the company instituted several cost- saving programs, including the substitution of automatic equipment for work previously done by workers and the purchase of raw materials in large quantities to obtain quantity discounts. Despite these cost-saving programs, the company's ROI for Year 8 was 10 percent (¼ $1,100,000/$11,000,000), based on sales of $20,000,000.

a. Break down the ROI for Year 7 and Year 8 into profit margin and investment turnover ratios.

b. Explain the reason for the decrease in ROI between the two years using the results from part a.

Reference no: EM13902912

Questions Cloud

The current exchange rate : Currently a basket of goods costs 50 pounds in England and 100 euros in France. Next year at the same time, we expect 10% inflation in England and 65% inflation in France. Based on the above information and the PPP concepts, the current exchange ra..

Which stakeholders appear to be valued by the board : Wrte a report on the given topic of the assignment is : CEO pay at Caterpillar and John Deere.1. Which stakeholders appear to be valued by the Board and it’s Compensation Committee? Why?2. Which firm’s communication is clearer and accessible?

Report the optimal strategy : Solve the decision tree in the following figure to maximize the expected value. Report the optimal strategy.

Multinational financial management : Multinational Financial Management

Explain the reason for the decrease in roi between two years : Break down the ROI for Year 7 and Year 8 into profit margin and investment turnover ratios. Explain the reason for the decrease in ROI between the two years using the results from part a.

Project completion time follows a normal distribution : A project has a completion time of 24 weeks with a variance of 9 weeks. Assuming that the project completion time follows a normal distribution, compute the following:

What is the return on investment for each year of asset life : What is the ROI for each year of the asset's life if the division uses beginning-of-year net book value asset balances for the computation?

When should an organization be a pay leader : When should an organization be a "pay leader", and when should it be a "pay follower"? Give examples of each type of organization.

Geographical area division to worldwide product division : The international structural stages model suggests that a typical evolutional path for an international company's structure would be: from international division to geographical area division to worldwide product division.

User Account

All Pages