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Chicago Paints is a national paint manufacturer and retailer. (Click the icon to view additional information.) Assume that management has specified a 19% target rate of retum. Read the requirements. Requirement 1. Calculate each division's ROI. First enter the formula, then calculate the ROI for each division. (Enter the ROI as a percent rounded to the nearest hundredth of a percentage, X.XX%.) ROI Paint Stores Consumer i . A Data Table Requirement 2. Calculate each division's sales margin. Interpret your results Enter the formula, then calculate the sales margin for each division (Enter the sales margin as a percent rounded to the nearest hundredth of a percentage, X.XX%.) = Sales margin Paint Stores Consumer The company is segmented into five divisions: Paint Stores (branded retail location), Consumer (paint sold through stores such as Sears, Home Depot, and Lowe's), Automotive (sales to auto manufacturers). International, and Administration. The following is selected hypothetical divisional information for the company's two largest divisions: Paint Stores and Consumer (in thousands of dollars). Interpret your results. The Division is more profitable on each dollar of sales. Sales Operating Income Paint Stores ..$ 3,850,000 $ 519,750 Consumer ... S 1,260,000 $ 195,300 Total Assets $1,750,000 $1,750,000 Print Done Requirement 3. Calculate each division's capital turnover. Interpret your results First enter the formula, then calculate the capital turnover for each division. (Round to two decimal places.) - Capital turnover Paint Stores = times Consumer times The Division is more efficient in generating sales with its assets. Requirement 4. Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results First enter the expanded ROI formula, then calculate the ROI for each division. (Enter the ROI as a percent rounded to the nearest hundredth of a percentage, XXX%) - ROI Paint Stores ] =D % Requirement 4. Use the expanded ROImule to conto your results from Rogement 1. Interpret your roshs. First ander the expanded ROI formula then calculate the ROI for each chision Enter the RCIAS A percent rounded to the nearest hundredth of a percentage X.XXX. - ROI Paint Stores Consumer than the Cors.mer Division's etency. These results cause the Paint Stores Division's ROI De t e Consumer Division's RCI. The Consumer Dison's profitability on each dolar of sales is than the Pant Stores Division's pruitablty. However the Paint Store Division's eficiency is signficamy Requirements Calculate each d on's RlInterprut your results and utier recommendations for any cision with negenve Ri. First enter the formula then calculate the RI for each division. Cher the amount in thousands. Use parentheses or a minus sign for negative residual incomes. Part Stores Commer Interpret your results and offer recommendations for any division with negativa . moeting management's target rate of reum. The should work on improng s y mproving this may help the diven scheve positive rescual income Wre provided in this problem. If you were in gather this inkarnation from an and er how would you the late ? Desc u A m atic and some of te pre Requiramante. To Most companies use the asset balance since the income used in the ROI calculation scarred over the year Management must also decde wether they wish to use the gross bock value of assets or the relbock value of assets. The book value is ation used because it is a sily pulled from the balance sheet. However, ROI using that value will artificialy rise over time due to Requirement 7. Desorte some of the factors that manegement considers when sing its minimum target rate ofretum Requirement 2. Explain why some firma refer to use Rl rather than Rol for partomance measurement. Ricos beter job of Requirement 9. Eeplain why bud R AMA PAPAMA CA ACTA incent for sing the performance client CANAR Investment centers are responsible for Budget versus actual performance reports are insufficient because they do not measure

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