Question

Sherwin-Williams is a national paint manufacturer and retailer (Click the icon to view additional information.) Assume that management has specified a 21 % target rate of return. Read the requirements

Answer 1

Answer Paint stores operations = Total Assetto ' 507000 1,500,000 Return on invertment - Not operating income. Numerda parint stores = 50.7000 (500 000 Nenominaler Consumer 507000 1500000 Rate of interet - 33.8% Numerator Parit stores = 180 000 Denominator Consumer a 1600,000 180000 ROL 3 1600 000 11.25%

- ③ ROI is higher hence it generates more Profit margin ration : ist operating income Numerator Rent Story = 507000 Consumer Denominator 3900 000 . - 50 7000 : 390000 390000 Profil Margus = 13) Numberator Parit stores 2. 186,0 Consumex Jenominatoy = 1200,000 180 000 1200 000 Profet Margin = 0.15. "

Profut Margin ration is higher than pail store ② Assest Turnover = . Net sales Revenue Numerator Paint stores =-3400,000 Denominator Consumer - 1500,000 2.3900,000 1500 000 . Asset Turnover Numerator Paint stores = 2.6% = 1200,000 Denomi notor Consumer 2 LGoo ,000 1200 000 1600 000 Asset tumover 75%

® ROI= Asset Turnoves Ratio x Profil Morgen Ration Pozofet margin Rauterin (a) = 13.6000). . Asset Turnover Ration (b) = 260000% 13.0000 X 260006 - Rate of intert (axb) = 33.60% Profit margin Ration (a) 2015 Assele turnover Ration (b) = 7.5 = 0.15 X 7.5 = 1:125 Rol (axb)

& Net operating income Paint stores - 56700 . Average Operabas Assels = 1500.00 operating Assel el% = 1500.000*700 ? 3.15000 Net operating income Consumer - 180000 Assets = 1600,00 Average operal assels X21% = 160000012! Average operating 100 3.36 000 Net operating income Pant Sta=56700 operating Asset = 315000

© = 504.00 - 315000 Redreal incon - 264300. Net operations incomp Paint stores = 180000 operating Assels = 33600 180000 - 33600 - $146 uoo Residecal income