In response to complaints about high prices, a grocery chain runs the following
ID: 2819078 • Letter: I
Question
In response to complaints about high prices, a grocery chain runs the following advertising campaign: “If you pay your child $1 to go buy $31 worth of groceries, then your child makes about twice as much on the trip as we do.” You’ve collected the following information from the grocery chain’s financial statements: (millions) Sales $ 772.00 Net income 12.35 Total assets 365.00 Total debt 157.00
What is the child’s profit margin? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
What is the store’s profit margin? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
What is the store's ROE? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Explanation / Answer
Given Information Amt in Million Sales $ 772.00 Net Income $ 12.35 Total Assets $ 365.00 Total Debts $ 157.00 Child Profit Margin=Net Income/Sales Net Income $ 1.00 Sales $ 31.00 Child Profit Margin=($1/$31) 3.23% Store Profit Margin=Net Income/Sales Net Income $ 12.35 Sales $ 772.00 Store Profit Margin=($12.35/772) 1.60% ROE=Net Income/Total Equity Total Equity=Total Assets-Total Debt Net Income= $ 12.35 Total Equity=($365-$157) $ 208.00 ROE=($12.35/$208) 5.94%
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.