In response to complaints about high prices, a grocery chain runs the following

Question

In response to complaints about high prices, a grocery chain runs the following advertising campaign: “If you pay your child $3 to go buy $60 worth of groceries, then your child makes twice as much on the trip as we do.” You’ve collected the following information from the grocery chain’s financial statements:

In response to complaints about high prices, a grocery chain runs the following advertising campaign: “If you pay your child $3 to go buy $60 worth of groceries, then your child makes twice as much on the trip as we do.” You’ve collected the following information from the grocery chain’s financial statements:

Explanation / Answer

Store

Total assets 360

Total debt 230

Profit = 130

Profit margin = Profit/sales * 100

= 130/660 * 100

= 19.70

store's ROE % = Net income / share holders fund *100 or

= Net income / total assets *100

= 16.5/360 * 100

= 4.58

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