Reader€™s Digest is the most widely read monthly magazine in the world. Its worldwide circulation is 23 million, and over 100 million people read it each month. Reader€™s Digest is published in 19 languages. But The Reader€™s Digest Association, Inc., does more than just sell a monthly magazine. Information relating to the company€™s business segments can be found in the company€™s annual report, an excerpt of which follows.

1. How does Reader€™s Digest generate most of its revenues? Its profits?
2. The profitability of each dollar of revenue is measured by the ratio (Operating profit/Revenues). Compute this ratio for each of Reader€™s Digest€™s three operating segments in 2004.Which segment has the highest profitability per dollar of revenue?
3. The extent to which a segment uses its assets to efficiently generate revenues is measured by the ratio (Revenues/Assets). Compute this asset turnover ratio for each of Reader€™s Digest€™s three operating segments in 2004. Which segment has the highest number of dollars of revenue generated for each dollar of assets?
4. The return on assets ratio (Operating profit/Assets) measures how well a segment combines profitability and efficiency to generate profits with the existing assets. Compute return on assets for each of Reader€™s Digest€™s three operating segments in 2004.Which segment has the highest operating profit generated for each dollar of assets?
5. Based on your answers to parts (1) and (2), how critical is Reader€™s Digest magazine to the firm€™s overall success? Before you answer this question, think about how the company is able to sell its books and home entertainmentproducts.

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The Readers Digest Association, Inc. Years Ended June 30, (in millions) 2 Reader's Digest North America Consumer Business Services 835.4 OPERATING PROFIT (LOSS) Reader's Digest North America Consumer Business Services Reader's Digest International Magazine deferred promotion charge Total operating profit 106I Reader's Digest North America $1,185.2