The following information relates to the operating performance of two divisions of Campbell Food International

Company's: 1) Soup and Sauces and 2) Beverages.

(all figures are in millions except for WACC)

Sales

Interest

Net

Income

Average

Operating

Assets

$1,200

$300

Average

Current

Liabilities

$400

$150

Weighted

Average Cost

of Capital

16%

16%

Division 1

$1,500

$105

$20

Division 2

$250

$27

$4

The tax rate is 25%.

REQUIRED:

(a) Compute each division's profit margin for return on assets (ROA).

(b) Compute each division's return on assets (ROA).

(c) Comments on the results of the preceding calculations and what would you recommend for the Company to do to improve return on assets