Brief Exercise 11-10 In its 2014 annual report, Campbell Soup Company reports be

Question

Brief Exercise 11-10 In its 2014 annual report, Campbell Soup Company reports beginning-of-the-year total assets of $8,113 million, end-of-the-year total assets of $8,323 million, total sales of $8,268 million, and net income of $807 million. Compute Campbell’s asset turnover. (Round answer to 4 decimal places, e.g. 4.8726.) Asset turnover times LINK TO TEXT Compute Campbell’s profit margin on sales. (Round answer to 4 decimal places, e.g. 4.8726%.) Profit margin on sales % LINK TO TEXT Compute Campbell’s return on assets using (1) asset turnover and profit margin and (2) net income. (Round answers to 2 decimal places, e.g. 4.87%.) Return on assets (1) Asset turnover and profit margin % (2) Net income % LINK TO TEXT

Explanation / Answer

Calculate following :

Avereage operating assets = 8113+8323 = 8218

Assets turnover = Turnover/Average operating assets

= 8268/8218

Assets turnover = 1.0061

Profit margin = Net income*100/sales

= 807*100/8268

Profit margin = 9.7605%

ROI = Assets turnover*Profit margin

= 1.0061*9.7605

ROI = 9.82%

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