Question
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
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, 2016, are as follows:
| Electronic | Investment | ||
|---|---|---|---|
| Mutual Fund | Brokerage | Banking | |
| Division | Division | 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.
| E.F. LYNCH COMPANY |
| Divisional Income Statements |
| For the Year Ended June 30, 2016 |
| 1 |
| Mutual Fund Division | Electronic Brokerage Division | Investment Banking Division | ||||||||||||||||
| 2 | Fee revenue | |||||||||||||||||||
| 3 | Operating expenses | |||||||||||||||||||
| 4 | Income from operations |
2. Using the DuPont formula for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investment for each division. If required, round your final answer to one decimal place.
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