Burberry plc, the British luxury fashion house that manufactures clothing, fragrance, and fashion accessories, had net income of £206.3 million on sales of £1,501.3 million in 2011. (£ is the British currency, the pound.) The company’s operating statistics for 2011 included the following:
Operating return on sales .......... 13.741%
Operating return on average total assets .... 16.610%
Total asset turnover ............ 1.209
Return on shareholders’ equity ...... 30.855%
1. Compute the following 2011 amounts for Burberry:
a. Operating income
b. Average total assets
c. Average shareholders’ equity
2. Which return is more important to shareholders, return on sales or return on shareholders’ equity? Why?

  • CreatedNovember 19, 2014
  • Files Included
Post your question