Zooms, a national manufacturer of lawn-mowing and snow-blowing e
Zooms, 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:
Management has a 26% target rate of return for each division. Zoomsâ weighted average cost of capital is 13% and its effective tax rate is 27%.
1. Calculate each divisionâs ROI. Round all of your answers to four decimal places.
2. Calculate each divisionâs profit margin. Interpret your results.
3. Calculate each divisionâs asset turnover. Interpret your results.
4. Use the expanded ROI formula to confirm your results from Requirement 1. What can youconclude?
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