Recent annual reports of two restaurant chains (Calem Incorporated and Garter Company) reveal the following (amounts in millions of US$):

Calem operates a chain of restaurants featuring value-priced meals and owns all of its restaurants. Garter also sells value-priced meals but operates through both company-owned and franchised restaurants. Garter owns the land and buildings of most of its franchised restaurants and leases the space to the franchisees.
a. Calculate the rate of return on assets for each company.
b. Disaggregate the rate of return on assets in part a into profit margin and total assets turnover components.
c. Comment on the relative profitability of the twocompanies.

  • CreatedMarch 04, 2014
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