#2

Basic Problems l. Low Carb Diet Supplement Inc. has two divisions. Division A has a profit of $156,000 on sales of $2,010,000. Division B is able to make only $28,800 on sales of $329,000. Based on the profit margins (returns on sales), which division is superior? 2. Database Systems is considering expansion into a new product line. Assets to support expansion will cost $380,000. It is estimated that Database can gener- ate $1,410,000 in annual sales, with an 8 percent profit margin. What would net income and return on assets (investment) be for the year? 3. Polly Esther Dress Shops Inc. can open a new store that will do an annual sales volume of $837,900. It will turn over its assets 1.9 times per year. The profit margin on sales will be 8 percent. What would net income and return on assets (investment) be for the year? 4. Billy's Crystal Stores Inc. has assets of SC, 0000 and turns over its assets 1.9 times per year. Return on assets is 8 percent. What is the firm's profit margin (return on sales)? 5. Elizabeth Tailors Inc. has assets of $8,940,000 and turns over its assets 1.9 times per year. Return on assets is 13.5 percent. What is the firm's profit margin (returns on sales)? 6. D r. Zhivgo Diagnostics Corn's income statement for 2Ox1 is as follows