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Chapter 2: 29BP_a (page 84)

The Global Products Corporation has three subsidiaries.

Medical supplies

Heavy machinery

Electronics

Sales

\(20,040,000

\)5,980,000

$4,730,000

Net Income (after tax)

1,700,000

592,000

402,000

Assets

8,340,000

8,760,000

3,570,000

a. Which division has the lowest return on sales?

Short Answer

Expert verified

The return on sales of the medical supplies is the lowest.

Step by step solution

01

Return on sales of the medical supplies

Returnonsales=NetincomeSales=$1,700,000$20,040,000=8.48%

02

Return on sales of the heavy machinery

Returnonsales=NetincomeSales=$592,000$5,980,000=9.90%

03

Return on sales of Electronics

Returnonsales=NetincomeSales=$402,000$4,730,000=8.50%

Hence, Medical supplies have the lowest return on sales.

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