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.
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=3, asset turnover=4(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=5 , asset turnover=6
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?