Answer:
1. Margin for Year 1= 5.62%, Margin for Year 2: 3.87%; Turnover for year 1 = 0.51, Turnover for year 2= 0.45
2. ROI for year 1 = 2.87%; ROI for year 2= 1.74%
Explanation:
Part 1: Calculate the margin and turnover ratios for each year (answers rounded up to two decimal places)
First, the formula for Margin and the formula for turnover
Margin= (Operating Income ÷ Sales)x 100
Turnover formula= Sales ÷ The Average Operating Assets.
Based on the formula,
Margin of Kisler Inc Year 1
= $523,222/ $9,310,000= 5.62%
Turnover of Kisler Inc. Year 1
= $9,310,000/$18,254,902= 0.51
Margin of Kisler Inc Year 2
= $307,278/$7,940,000 x 100= 3.87%
Turnover of Kisler Inc. Year 2
= $7,940,000/$17,644,444= 0.45
Part 2: Compute the Return On Investment for the Consumer Product Division fore Years 1 and 2
Return on Investment = (Margin x Turnover) x 100
ROI for Year 1 = 5.62% x 0.51 = 0.0562 x 0.51 x100 = 2.87%
ROI for Year 2 = 3.87% x 0.45 = 0.0387 x 0.45 x100 = 1.74%
