Question:
The Global Products Corporation has three subsidiaries.
|
Medical Supplies |
Heavy Machinery |
Electronics |
| Sales |
$20,000,000 |
$5,000,000 |
$4,000,000 |
| Net Income( after taxes) |
$1,200,000 |
190,000 |
320,000 |
| Assets |
8,000,000 |
8,000,000 |
3,000,000 |
a. Which division has the lowest return on sales?
b. Which division has the highest return on assets?
c. Compute the return on assets for the entire corporation.
d. If the $8,000,000 investment in the heavy machinery division is sold off and redeployed in the medical supplies subsidiary at the same rate of return on assets currently achieved in the medical supplies division, what will be the new return on assets for the entire corporation?