Question

Zuds, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: Professional and Residential. The following divisional information was available for the past year (in thousands of dollars):
Management has a 26% target rate of return for each division. Zuds’ weighted average cost of capital is 17% and its effective tax rate is 32%.
Requirements
1. Calculate each division’s ROI. Round all of your answers to four decimal places.
2. Calculate each division’s profit margin. Interpret your results.
3. Calculate each division’s asset turnover. Interpret your results.
4. Use the expanded ROI formula to confirm your results from Requirement 1. What can you conclude?


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  • CreatedApril 30, 2015
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