Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]

A food manufacturer reports the following for two of its divisions for a recent year.

($millions)	Beverage Division				Cheese Division
Invested assets, beginning	$	2,697			$	4,490
Invested assets, ending		2,611				4,418
Sales		2,699				3,943
Operating income		367				652

Exercise 22-12 Return on investment LO A1, A2

1. Compute return on investment. 2. Compute profit margin. 3. Compute investment turnover for the year.

Compute return on investment. (Enter your answers in millions.)

Return on Investment
	Choose Numerator:	/	Choose Denominator:	=	Return on Investment
Investment Center		/		=	Return on investment
Beverage		/		=
Cheese		/		=

Compute profit margin. (Enter your answers in millions.)

Profit Margin
	Choose Numerator:	/	Choose Denominator:	=	Profit Margin
Investment Center		/		=	Profit margin
Beverage		/		=
Cheese		/		=

Compute investment turnover for the year. (Enter your answers in millions.)

Investment Turnover
	Choose Numerator:	/	Choose Denominator:	=	Investment Turnover
Investment Center		/		=	Investment turnover
Beverage		/		=
Cheese		/		=

Assume that each of the companys divisions has a required rate of return of 6%. Compute residual income for each division. (Enter your answers in millions.)

($ millions)	Beverage	Cheese
Targeted return
Target income
Residual Income	Beverage	Cheese
Residual income