Bear Paints is a national paint manufacturer and retailer. The company is segmented into five divisions: Paint stores (branded retail locations), Consumer (paint sold through stores like Sears and Lowe€™s), Automotive (sales to auto manufacturers), International, and Administration. The following is selected divisional information for its two largest divisions: Paint stores and Consumer:

Management has specified a 21% target rate of return. The company€™s weighted average cost of capital is 14%. The company€™s effective tax rate is 34%.
Requirements
1. Calculate each division€™s profit margin. Interpret your results.
2. Calculate each division€™s asset turnover. Interpret your results.
3. Use the expanded ROI formula to confirm your results from Requirement 1.
Interpret your results.
4. Calculate each division€™s RI. Interpret your results and offer a recommendation for any division with negative RI.
5. Calculate each division€™s EVA. Interpret your results.
6. Describe some of the factors that management considers when setting its minimum target rate ofreturn.

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Average Total Assets Operating Current Liabilities Sales Income 477,000 185,000 Paint stores Consumer $ 3,940,000 1,310,000 $ 1,410,000 1,575,000 343,000 605,000