Problem 3-21 Profit Margin [LO4]In response to complaints about high prices, a grocery chain runs the following advertising campaign: “If you pay your child $4 to go buy $100 worth of groceries, then your child makes twice as much on the trip as we do.” You’ve collected the following information from the grocery chain’s financial statements: ($ in millions) Sales$640.0 Net income 12.8 Total assets 370.0 Total debt 240.0 a.What is the profit margin for the child as a percentage of what they spend and the profit margin for the store? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)b.What is the store's ROE? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answered: a. What is the profit margin for the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Problem 3-21 Profit Margin [LO4]

In response to complaints about high prices, a grocery chain runs the following advertising campaign: “If you pay your child $4 to go buy $100 worth of groceries, then your child makes twice as much on the trip as we do.” You’ve collected the following information from the grocery chain’s financial statements:

($ in millions)
Sales	$	640.0
Net income		12.8
Total assets		370.0
Total debt		240.0

a.	What is the profit margin for the child as a percentage of what they spend and the profit margin for the store? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
b.	What is the store's ROE? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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