question 2 performance evaluation dupont method 457699

Use the following data for Apple and Dell for year 2008 (real data, in $ million):

Apple Dell

Profit (operating income) $6,275 $3,190

Sales revenue $32,479 $61,101

Investment (total assets) $32,460 $27,031

Required:

a) compute the ROI for each company.

Apple ROI= _____________ % (if you get say 12.5%, enter 12.5, not 12.5% or 0.125)

Dell ROI= _______________%

b) use the DuPont method to decompose ROI into ROI = profit margin * asset turnover.

In other words, compute profit margin and asset turnover for each company:

Apple profit margin= __________ , asset turnover= ____________ (Enter both as a fraction of 1, not as percentage. I.e., if the profit margin is 0.045 (4.5%) and asset turnover is 3.42 (342%), enter 0.045 and 3.42)

Dell profit margin= ____________ , asset turnover= _____________

If you multiply profit margin * asset turnover, you should get the ROI from part (a)

c) Which company has higher profit margin? Does it make sense, based on what you know about Apple and Dell?