5. Profit Margin, investment turnover, and rate of return on investment

The divisional income statements for three divisions of the McLaren company are show.

McLaren Company

Divisional Income statements

For the Year ending December 31,2013

	Divsion A	Division B	Division C
Revenues	$960,000	$900,000	$320,000
Operating expense	564,500	675,000	170,000
Income from operation before service department charges	$395,500	$225,000	$150,000
Service department charges	275,500	135,000	70,000
Income from Operations	$120,000	$90,000	$80,000

Additional financial data from the three divisions of the McLaren company are shown.

	Division a	Division B	Division C
Invested assets	$1,000,000	$600,000	$400,000

Please complete the follwoing four questions:

A. Calculate the profit margin and the investment turnover for each division. Round profit margin to the nearest tenth of a percent for example, 14.6% and investment turnover to two decimal places for example, 0.82.

	Division A	Division B	Division C
Profit margin
Investment turnover

b. Using the profit margins and investment turnovers, calculate the rate of return on investment for each division using the DuPont formula. Round the rate of return on investment to the nearest hundredth of percent for example, 16.94%.

	Division a	Division B	Division C
Rate of return of investment

C. The division showing the highest operating profitablity is Division __________.

D. The division showing the highest operating efficiency is Division_______.