Question

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

Answer 1

Only first four requirements are solved.

Requirement 1 Each Division's ROI B C =B/A Divisions Total Assets Operating Income ROI Paint Stores Consumer Total $ $ $ 15,00,000 16,00,000 31,00,000 $ $ $ 5,07,000 1,80,000 6,87,000 33.80% 11.25% Requirement 2 Each Division's Sales Margin в/ 1. Divisions Sales Operating Income C=B/A Sales margin 13.00% 15.00% Paint Stores Consumer Total $ $ $ 39,00,000 $ 12,00,000 $ 51,00,000 $ 5,07,000 1,80,000 6,87,000 Requirement 3 Each Division's Capital Turnover B Divisions Total Assets Sales C =B/A Capital Turnover 260.00% 75.00% Paint Stores Consumer Total $ $ $ 15,00,000 16,00,000 31,00,000 $ $ $ 39,00,000 12,00,000 51,00,000 Requirement 4 Expanded ROI = Sales margin* Capital Turnover Divisions Paint Stores Consumer Sales Margin 13.00% 15.00% B Capital Turnover 260.00% 75.00% C =B/A ROI 33.80% 11.25% Hence, the ROI computed in Requirement 1 and is same as ROI computed in Requirement 4.