Return on Assets (ROA) The following information relates to the operating performance of two divisions of...
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Return on Assets (ROA) The following information relates to the operating performance of two divisions of Campbell Food International Company's: 1) Soup and Sauces and 2) Beverages. (all figures are in millions except i WACC) Sales Division 1 Division 2 $1,500 $250 Net Income $105 $27 Interest $20 $4 The tax rate is 25%. REQUIRED: (a) Compute each division's profit margin for return on assets (ROA). (b) Compute each division's return on assets (ROA). Average Operating Assets $1,200 $300 CS Scanned with CamScanner Average Current Liabilities $400 $150 Weighted Average Cost of Capital 16% 16% (c) Comments on the results of the preceding calculations and what would you recommend for the Company to do to improve return on assets (ROA). Return on Assets (ROA) The following information relates to the operating performance of two divisions of Campbell Food International Company's: 1) Soup and Sauces and 2) Beverages. (all figures are in millions except i WACC) Sales Division 1 Division 2 $1,500 $250 Net Income $105 $27 Interest $20 $4 The tax rate is 25%. REQUIRED: (a) Compute each division's profit margin for return on assets (ROA). (b) Compute each division's return on assets (ROA). Average Operating Assets $1,200 $300 CS Scanned with CamScanner Average Current Liabilities $400 $150 Weighted Average Cost of Capital 16% 16% (c) Comments on the results of the preceding calculations and what would you recommend for the Company to do to improve return on assets (ROA).
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