In response to complaints about high prices, a grocery chain runs the following advertising campaign: If you

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In response to complaints about high prices, a grocery chain runs the following advertising campaign: "If you pay your child $1.50 to go buy $50 worth of groceries, then your child makes twice as much on the trip as we do." You've collected the following information from the grocery chain's financial statements:

($ in millions)

Sales.........................................$710

Net income.................................10.65

Total assets...................................390

Total debt....................................280

Evaluate the grocery chain's claim. What is the basis for the statement? Is this claim misleading? Why or why not?

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Fundamentals of Corporate Finance

ISBN: 978-0077861704

11th edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

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