If expenses could be reduced by 52500 without descreasing

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Reference no: EM13615695

The condensed income statement for the European Division ofCougar Motors Inc. is as follows(assuming no service departmentcharges): sales 875,000

cost of goodssold 400,000

grossprofit 475,000

administrative expenses 282,500

income from operations 192,500

The manager of the European Division is considering ways toincrease the rate of returns on investment.

A. Useing the Dupont formula for rate of return on investment,determine the profit margin, investment turnover, and rate of return on investment of the European Division, assuming that1,750,000 of assets have been invested in the european Division.

B.If Expenses could be reduced by 52,500 without descreasingsales, what would be the impact on the profit margin, investment turnover, and rate of return on investment for the European Division

Reference no: EM13615695

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