Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Requirements 5 and 6 please! Using ROI and RI to evaluate investment centers Benjamin Doore is a national paint manufacturer and retailer. The company is
Requirements 5 and 6 please!
Using ROI and RI to evaluate investment centers | |||||||||||||
Benjamin Doore is a national paint manufacturer and retailer. The company is segmented into five divisions: | |||||||||||||
Paint Stores (branded retail locations), Consumer (paint sold through home improvement stores), | |||||||||||||
Automotive (sales to auto manufacturers), International, and Administration. The following is selected | |||||||||||||
divisional information for its two largest divisions: Paint Stores and Consumer: | |||||||||||||
Net Sales | Operating Income | Average Total Assets | |||||||||||
Paint Stores | $4,010,000 | $482,000 | $1,385,000 | ||||||||||
Consumer | 1,280,000 | 185,000 | 1,585,000 | ||||||||||
Management has specified a 19% target rate of return. | |||||||||||||
Requirements | |||||||||||||
1.) | Calculate each division's ROI. Round all of your answers to four decimal places. | ||||||||||||
2.) | Calculate each division's profit margin ratio. Interpret your results. | ||||||||||||
3.) | Calculate each division's asset turnover ratio. Interpret your results. | ||||||||||||
4.) | Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results. | ||||||||||||
5.) | Calculate each division's RI. Interpret your results. Offer a recommendation for any division with negative RI. | ||||||||||||
6.) | Describe some of the factors that management considers when setting its minimum target rate of return. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started