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Calculate each division profit margin ratio

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Reference no: EM132978764

Question - Zulas, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: professional and residential. The following divisional information was available for the past year:

Residential

Net Sales Revenue 570,000

Operating Income 60,450

Average Total Assets 186,000

Professional

Net Sales Revenue 1,090,000

Operating Income 150,400

Average Total Assets 376,000

Management has a 23?% target rate of return for each division.

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. What can you conclude?

Reference no: EM132978764

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