The condensed divisional income statements for the three divisions is: $1,159,200, $268,800, $820,800.
<h3>Condensed divisional income statements </h3>
E.F. Lynch Company
Divisional Income Statements For the Year Ended June 30, 20Y8
Mutual Fund Electronic Brokerage Investment Banking Division
Fee revenue $4,140,000 $3,360,000 $4,560,000
Operating expenses $2,980,800 3,091,200 $3,739,200
Operating income $1,159,200, $268,800, $820,800
2. Profit margin, investment turnover, and return on investment
Mutual Fund Electronic Brokerage Investment Banking Division
Sales $4,140,000 $3,360,000 $4,560,000
Invested assets $5,175,000 $1,120,000 $3,800,000
Operating income $1,159,200, $268,800, $820,800
Margin and Turnover
Margin= Net operating income/Net sales
Mutual Fund Electronic Brokerage Investment Banking Division
Operating income $1,159,200 $268,800 $820,800
Sales $4,140,000 $3,360,000 $4,560,000
Margin 28% 8% 18%
Asset turnover ratio=Net sales/Average operating assets
Mutual Fund Electronic Brokerage Investment Banking Division
Sales $4,140,000 $3,360,000 $4,560,000
Invested Assets $5,175,000 $1,120,000 $3,800,000
Turnover 0.8 3 1.2
Return on investment (ROI)=Margin×Assets turnover
Mutual Fund Electronic Brokerage Investment Banking Division
Margin 28% 8% 18%
Assets turnover 0.8 3 1.2
RO1 22.4% 24% 21.6%
Summary:
Division Profit Margin Investment Turnover ROI
Mutual Fund Division 28% 0.8 22.4%
Electronic Brokerage Division 8% 3 24%
Investment Banking Division 18% 1.2 21.6%
3. When faced with limited funds for expansion, management should consider an expansion of the Electronic Brokerage Division first.
Therefore the condensed divisional income statements for the three divisions is: $1,159,200, $268,800, $820,800.
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