Kraft Foods Group reports the following for two of its divisions for a recent ye
ID: 2520890 • Letter: K
Question
Kraft Foods Group reports the following for two of its divisions for a recent year. All numbers are in millions of dollars (Smillions) Invested assets, beginning Invested assets, ending Sales Operating income Beverage Cheese Division $ 7,650 7,350 6,000 1,350 Division $ 3,050 2,950 3,900 702 1. Compute return on investment. (Enter your answer in millions of dollar.) Return on Investment Choose Numerator: Choose Denominator: Return on Investment Investment Center Beverage Cheese Return on investment 2. Compute profit margin. (Enter your answer in millions of dollar.) Profit Margin Choose Numerator: Choose Denominator: Profit Margin Profit margin Investment Center Beverage CheeseExplanation / Answer
1)
Return on investment
Choose / choose = return
Numerator denominator on
Investment
Investment operating / average = return on
Center Income invested assets investment
Beverage $702 / 3000 = 23.4%
Chesse $1350 / 7500 = 18%
Note-
Average invested asset = invested asset (beginning )+ invested asset(ending )/2
Beverage = 3050+2950/2 =3000
Chesse- 7650+7350/2 = 7500
2)
Profit margin
Choose / choose = profit
Numerator denominator margin
Investment operating / sales = profit
Center Income margin
Beverage $702 / 3900 = 18%
Chesse $1350 / 6000 = 22.5%
3)
inventory turnover
Choose / choose = inventory
Numerator denominator turnover
Investment sales / average = inventory
Center invested assets turnover
Beverage 3900 / 3000 = 1.3
Chesse 6000 / 7500 = 0.8
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