Exercise 9-21 Profit margin and investment turnover LO A2 L\'Oréal reports the f

Question

Exercise 9-21 Profit margin and investment turnover LO A2 L'Oréal reports the following for a recent year for the major dmsions in its cosmetics branch Total Assets End of Year Total Assets of 2,516 5,496 4,059 817 come Professional products 2,717 552 2624 9,530 1,765 791 278 5,994 3,651 830 Consumer products Luxury products Active cosmetics 4,507 1,386 Total 18,140 3,386 13099 12,888 1.1 Compute profit margin for each division. (Enter your answers in millions.) Choose Numerator:Choose Denominator:Profit Margitn Profit Margin Investment Center Professional products Consumer products Luxury products Active cosmetics 0 0 12 Which L'Oreal division has the highest proft margin? Luxury products Consumer products

Explanation / Answer

1.1) Choose numerator / Choose denominator = Profit Margin Investment Center Income / Sales = Profit Margin Professional products 552 / 2717 = 20.32% Consumer products 1765 / 9530 = 18.52% Luxury products 791 / 4507 = 17.55% Active cosmetics 278 / 1386 = 20.06% 1.2) Professional products has the highest profit margin. 1.3) Choose numerator / Choose denominator = Profit Margin Investment Center Sales / Assets at end of year = Profit Margin Professional products 2717 / 2624 = 1.04 Consumer products 9530 / 5994 = 1.59 Luxury products 4507 / 3651 = 1.23 Active cosmetics 1386 / 830 = 1.67 1.4) Active cosmetics has the best investment turnover ratio.

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