Question

Ultimate Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and inline skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-snow Sports. The following divisional information is available for the past year (Click the icon to view the information.) Ultimate's management has specified a 13% target rate of return. Calculate each division's profit margin ratio. Interpret your results. Begin by selecting the formula to calculate profit margin ratio, and then enter the amounts to calculate each division's profit margin ratio. Profit margin ratio Snow Sports % Non-snow Sports Based on the divisions' profit margins, we know that the profit margins the divisions had different ROI's. Data Table Net Sales Operating Average Total Revenue Income Assets ROI $5,400,000 $ Snow Sports 1,080,000 $ 4,500,000 24 Non-snow Sports 8,600,000 1,720,000 6,500,000 26.5% Print Done

Answer 1

Profit margin radio Net Income x 100 x too 1. Net Sales + Snow Sports - 1080000 x 600 = 20% 5400000 Non Snow Sports = 1720000 x100 = 20% 8600000 Here both divisions have some profit margin actio . . but different Rol's Var ON