University Hero is considering expanding operations beyond its healthy sandwiches. Jim Axelrod, vice president of marketing, would like to add a line of smoothies with a similar health emphasis. Each smoothie would include two free health supplements such as vitamins, antioxidants, and protein. Jim believes smoothie sales should help fill the slow mid-afternoon period. Adding the line of smoothies would require purchasing additional freezer space, machinery, and equipment. Jim provides the following projections of net sales, net income, and average total assets in support of his proposal. Sandwiches Only Sandwiches and SmoothiesNet sales $ 900,000 $ 1,500,000Net income 170,000 260,000Average total assets 500,000 900,000Required:1. Calculate University Hero’s return on assets, profit margin, and asset turnover for sandwiches only.2. Calculate University Hero’s return on assets, profit margin, and asset turnover for sandwiches and smoothies.3. Based on these ratios, what recommendation would you make?
University Hero is considering expanding operations beyond its healthy sandwiches. Jim Axelrod, vice president of marketing, would like to add a line of smoothies with a similar health emphasis. Each smoothie would include two free health supplements such as vitamins, antioxidants, and protein. Jim believes smoothie sales should help fill the slow mid-afternoon period. Adding the line of smoothies would require purchasing additional freezer space, machinery, and equipment. Jim provides the following projections of net sales, net income, and average total assets in support of his proposal.
Sandwiches Only Sandwiches and Smoothies
Net sales $ 900,000 $ 1,500,000
Net income 170,000 260,000
Average total assets 500,000 900,000
Required:
1. Calculate University Hero’s return on assets, profit margin, and asset turnover for sandwiches only.
2. Calculate University Hero’s return on assets, profit margin, and asset turnover for sandwiches and smoothies.
3. Based on these ratios, what recommendation would you make?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
