The Multi-Corporation has three different operating divisions. Financial information for each is as follows:
a. Which division provides the highest operating margin?
b. Which division provides the lowest after-tax profit margin?
c. Which division has the lowest after-tax return on assets?
d. Compute net income (after-tax) to sales for the entire corporation.
e. Compute net income (after-tax) to assets for the entire corporation.
f. The vice president of finance suggests the assets in the Appliances division be sold off for $10 millions and redeployed in Sporting Goods. The new $10 million in Sporting Goods will produce the same after-tax return on assets as the current $8 million in that division. Recompute net income to total assets for the entire corporation assuming the above suggested change.
g. Explain why Sporting Goods, which has a lower return on sales than Appliances, has such a positive effect on return on assets.

  • CreatedSeptember 21, 2015
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