Exercise 12-11 (15 minutes)
Division
Alpha Bravo Charlie
Sales ... $4,000,000 $11,500,000 * $3,000,000
Net operating income... $160,000 $920,000 * $210,000 *
Average operating assets ... $800,000 * $4,600,000 $1,500,000
Margin... 4%* 8% 7%*
Turnover ... 5* 2.5 2
Return on investment (ROI) .. 20% 20%* 14%*
Note that Divisions Alpha and Bravo use different strategies to obtain the
same 20% return. Division Alpha has a low margin and a high turnover,
whereas Division Bravo has just the opposite.
*Given.
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