EXERCISE 12-13 (15 MINUTES)

2. The manager of the New South Wales Division seems to be doing the

better job. Although her margin is three percentage points lower than

the margin of the Queensland Division, her turnover is higher (a turn-

over of 3.5, as compared to a turnover of two for the Queensland Divi-

sion). The greater turnover more than offsets the lower margin, result-

ing in a 21% ROI, as compared to an 18% ROI for the other division.

Notice that if you look at margin alone, then the Queensland Division

appears to be the stronger division. This fact underscores the impor-

tance of looking at turnover as well as at margin in evaluating perform-

ance in an investment center.