Company Ltd. has two different product lines, cupcakes and cookies. The most recent financial information indicated total
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Company Ltd. has two different product lines, cupcakes and cookies. The most recent financial information indicated total cupcake sales of $300,000 and profit of $15,000. This division had $100,000 of average operating assets throughout the year. Total cookie sales were $500,000 with profit of $50,000. The cookie product line had average operating assets of $250,000. The company has indicated that the minimum required return for any product line it offers is 16%. Required a) Compute the ROI of each division stated in terms of margin and turnover. b) Which division is doing better and why?
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