ACB ltd. (MCS-2008) Numerical
Analyze and comment upon performances of both the divisions
Solutions:
Division XROI = (Profit / investment)* 100
Profit = (28/100)*25lacs
= 7lacs
Profit margin = (Profit/sales)*100
= (7/100)*100
= 7lacs
Turnover of investments = (Sales/investment)*100
= (100/25)*100
= 4 times
Division Y
ROI = (Profit / investment)* 100
Profit = (26/100)*100lacs
= 26lacs
Profit margin = (Profit/sales)*100
= (26/500)*100
= 5.2lacs
Turnover of investments = (Sales/investment)*100
= (500/100)*100
= 5 times
Profit margin of X is better than profit margin of division Y. Turnover of investment of division Y is better thanDivision X.
Hence cost management of Division X is better than Division Y.