Financial Analysis (Financial Management)

Q.1  Low Carb Diet Supplement Inc. has two divisions. Division A has a profit of $156,000 on sales of $2,010,000. Division B is able to make only $28,800 on sales of $329,000. Based on the profit margins (returns on sales), which division is superior?

Q.2. Database systems is considering expansion into a new product line. Assets to support expansion will cost $380,000. It is estimated that Database can generate $1,410,000 in annual sales, with an 8 percent profit margin. What would net income and return on assets (investment) be for the year?

Q.3. Polly Esther Dress Shops Inc. Can open a new store that will do an annual sales volume of $837,900. It will turn over its assets 1.9 times per year. The profit margins on sales will be 8 percent. What would net income and return on assets (investment) be for the year?

Q.4. Billy’s Crystal stores Inc. has assets of $5,960,000 and turns over assets 1.9 times per year. Return on assets is 8 percent. What is the firms profit margin(Return on sales)?

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