Divisional Income Statements and Return on Investment Analysis:

E.F. Lynch Company is a diversified investment company with three operating divisions organized as centers. Condensed data taken from the recordis of the three divisions for the year ended 30, 20y8, are as follows:

Mutual Fund Electronic Brokerage Investment Baking

Division. Division. Division

Fee revenue. $1,970,000. $2,050,000. $1,920,000

Operating Expense. 1,062,800. 970,000. 1,452,000

Investment assets. 7,200,000. 6,000,000. 3,900,000

The mabatement of E.F. Lynch Company is evaquatint each division as a basis for planning a future expansion of operations.

Required:

Prepare condensed divisional income statements for the three divisions, assuming that there were no service depart net charges.

E.F. Lynch Company

Divisional Income Statements

For the year ending June 30, 20y8

Mutual fund division. Electronic Brokenrage division. Investment banking division

fee revenue. $ $. $

Operating expense.

Income from operation. $. $. $

2. Using the Dupont forumla for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investmenot for each division. Round your answer to one decimal place.

Profit Margin. Investment Turnover. ROI

Mutual Fund Division. %. %

Electric Brokerage Division. %. %

Investment Banking division. %. %

3. When faced with limited funds for expansion, managemeant should consider an. Expansion of the ? Division first.