3) Using ROI and RI to evaluate investment centers

Unbelievable Sports Company makes snowboards, downhill skis, cross-country skis, skateboards,

surfboards, and inline skates. The company has found it beneficial to split operations into two

divisions based on the climate required for the sport; Snow sports and Non-snow sports. The

following divisional information is available for the past year:

Net Sales Operating Income Average Total Assets ROI

Snow Sports $5,500,000 $935,000 $4,500,000 20.8%

Non-snow

Sports 8,400,000 1,428,000 6,700,000 21.3%

Unbelievable Sports management has specified a 16% target rate of return.

REQUIRMENTS:

1) Calculate each divisions profit margin ratio.

2) Interpret your results in a few sentences.

Show work, do not use excel word if possible