Extreme Sports Company makes snowboards, downhill skis, cross- country skis, skate-boards, surfboards, and inline skates. The company has found it beneficial to split oper-ations into two divisions based on the climate required for the sport: Snow Sports and Non- snow Sports. The following divisional information is available for the past year:

Extreme€™s management has specified a 16% target rate of return. Calculate each ­division€™s profit margin ratio. Interpret yourresults.

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Operating Average Net Sales $5,500,000 8,400,000 Income Total Assets ROI $ 935,000 1,428,000 $4,500,000 Snow Sports Non-snow Sports 20.8% 6,700,000 21.3%