Question
Use the following data for Apple and Dell (in $ million): Apple Dell Profit (operating income) $6,275 $3,190 Sales revenue $32,479 $61,101 Investment (total assets)
Use the following data for Apple and Dell (in $ million):
Apple | Dell | |
Profit (operating income) | $6,275 | $3,190 |
Sales revenue | $32,479 | $61,101 |
Investment (total assets) | $32,460 | $27,031 |
Required: a) compute the ROI for each company. Apple ROI= % (if you get say 12.5%, enter 12.5, not 12.5% or 0.125) Dell ROI= % b) use the DuPont method to decompose ROI into ROI = profit margin * asset turnover. In other words, compute profit margin and asset turnover for each company: Apple profit margin= , asset turnover= (Enter both as a fraction of 1, not as percentage. I.e., if the profit margin is 0.045 (4.5%) and asset turnover is 3.42 (342%), enter 0.045 and 3.42) Dell profit margin= , asset turnover= If you multiply profit margin * asset turnover, you should get the ROI from part (a) c) Which company has higher profit margin?(1=Apple, 2=Dell) d) Which company has higher asset turnover? 1=Apple, 2=Dell)
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