In this exercise, you are going to calculate the following ratios for the three segments of Prestige Auto’s business—New Cars, Used Cars, and Service—on the DB Problem 14.1 Template:

Net profit margin percentage

Asset intensity

Leverage

Return on equity

Breakeven point in sales

Profit earned

Fixed cost percentage of sales

Gross margin percentage

SG&A percentage of sales

The numbers needed for this have all been incorporated in the worksheets that hold the segment’s contribution for 10 years—New Cars Contribution-10 years, Used Cars Contribution-10 Years, and Repairs Contribution-10 years. Your calculations will be done on the worksheet titled Database Problem 14.1 Template. Do the calculations for each of the ratios requested.

REQUIRED:

a. Turn in the worksheet when you have completed all of your analysis along with your answer to the following question.

b. Which segment looks best for Prestige Auto? Why?