In response to complaints about high prices, a grocery chain runs the following

Question

In response to complaints about high prices, a grocery chain runs the following advertising campaign: "If you pay your child $4 to go buy $50 worth of groceries, then your child makes twice as much on the trip as we do." You've collected the following information from the grocery chain's financial statements: (millions) Sales Net income Total assets Total debt $720.0 28.8 450.0 320.0 What is the profit margin for child as a percentage of what they spend and the profit margin for the store? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g, 32.16.) Profit margin Child Store What is the store's ROE? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) ROE

Explanation / Answer

Child profit margin=4/50=8.00%

store profit margin=28.8/720=4.00%

ROE=28.8/(450-320)

=22.15%

the above is correct answer

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