Divisional income statements and return on investment analysis

E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows:

	Mutual Fund Division		Electronic Brokerage Division		Investment Banking Division
Fee revenue	$4,140,000		$3,360,000		$4,560,000
Operating expenses	2,980,800		3,091,200		3,739,200
Invested assets	5,175,000		1,120,000		3,800,000

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

Required:

Question Content Area

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

	Mutual Fund Division	Electronic Brokerage Division	Investment Banking Division
Fee revenue
Operating expenses
Income from Operations

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2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. If required, round investment turnover to one decimal place.

Division	Profit Margin	Investment Turnover	ROI
Mutual Fund Division
Electronic Brokerage Division
Investment Banking Division