Profit Margin, Investment Turnover, and Rate of Return on Investment

The condensed income statement for the International Division of King Industries Inc. is as follows (assuming no service department charges):

Sales	$768,000
Cost of goods sold	345,600
Gross profit	$422,400
Administrative expenses	192,000
Income from operations	$230,400

The manager of the International Division is considering ways to increase the rate of return on investment.

a. Using the DuPont formula for rate of return on investment, determine the profit margin, investment turnover, and rate of return on investment of the International Division, assuming that $1,920,000 of assets have been invested in the International Division. Round the investment turnover to one decimal place.

Profit margin	%
Investment turnover
Rate of return on investment	%

b. If expenses could be reduced by $38,400 without decreasing sales, what would be the impact on the profit margin, investment turnover, and rate of return on investment for the International Division? Round the investment turnover to one decimal place.

Profit margin	%
Investment turnover
Rate of return on investment	%