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?