Using rate of return which is the most profitable district

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Reference no: EM13902922

Comparing profit margin and ROI as performance measures. College Coffee Shops operates coffeehouses on college campuses in three districts. The operating performance for each district follows.

		District
	New_Orleans	Chicago	Denver
Sales	$1,900,000	$8,500,000	$10,000,000
Operating Profit	200,000	500,000	1,000,000
Investment	2,000,000	6,250,000	8,000,000

a. Using the operating profit margin percentage as the criterion, which is the most profitable district?

b. Using the rate of return on investment as the criterion, which is the most profitable district?

c. Which of the two measures better indicates operating performance? Explain your reasoning.

Reference no: EM13902922

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