In response to complaints about high prices, a grocery chain runs the following advertising campaign: "If you pay your child $3 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: (millions) Sales $700 Net income $10.5 Total assets $380 Total debt $250 1. What is the profit margin for children as a percentage of what they spend and the profit margin for the store? 2. What is the store's ROE?
In response to complaints about high prices, a grocery chain runs the following advertising campaign: "If you pay your child $3 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: (millions) Sales $700 Net income $10.5 Total assets $380 Total debt $250 1. What is the profit margin for children as a percentage of what they spend and the profit margin for the store? 2. What is the store's ROE?
Chapter16: Multistate Corporate Taxation
Section: Chapter Questions
Problem 15DQ
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Transcribed Image Text:In response to complaints about high prices, a grocery
chain runs the following advertising campaign: "If you
pay your child $3 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:
(millions)
Sales
$700
Net income $10.5
Total assets $380
Total debt
$250
1. What is the profit margin for children as a
percentage of what they spend and the profit margin
for the store?
2. What is the store's ROE?
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