Calculating and disaggregating rate of return on assets. Recent annual reports of Cracker Barrel Old Country Store
Question:
Calculating and disaggregating rate of return on assets. Recent annual reports of Cracker Barrel Old Country Store (Cracker Barrel) and Outback Steakhouse (Outback) reveal the following for Year 8 (amounts in thousands):
Cracker Barrel operates a chain of restaurants featuring value-priced country meals. Its restaurants are open for all meals every day. Each restaurant also sells craft items with a country theme. Outback operates a chain of restaurants featuring steaks. Each restaurant carries an Australian theme and serves primarily the dinner meal. Outback tends to locate its restaurants in buildings that were formerly restaurants that went out of business. The income tax rate for Year 8 is 35 percent.
a. Calculate the rate of return on assets for each company.
b. Disaggregate the rate of return on assets in part a into profit margin and total assets turnover components.
c. Comment on the relative profitability of the two companies for Year 8 .
Step by Step Answer:
Financial Accounting An Introduction To Concepts Methods And Uses
ISBN: 9780324183511
10th Edition
Authors: Clyde P. Stickney, Roman L. Weil