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Chapter 6 questions - that they sell Although fewer goods...

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Patrick Hourigan RET 261 2-10-08 Chapter 6 Questions 5. I would expect Wal-Mart to have a higher asset turnover. This is because Wal-Mart targets customers looking for a low price and not a high assortment of inventory. Neiman Marcus focuses on people interested in fashionable goods so they need to invest in more merchandise inventory, thus creating a lower asset turnover. Also, I believe that Wal-Mart and Neiman Marcus will have net profit margins that are very similar. Both of these stores generate large numbers of net profit and net sales; however Neiman Marcus is more profitable with the goods
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Unformatted text preview: that they sell. Although fewer goods may be sold here, at their higher prices the net profit margin may turn out to be a little higher than Wal-Mart. 8. Lowe’s asset turnover is equal to net sales divided by total assets, so Lowe’s asset turnover for 2005 was 1.72. Lowe’s net profit margin percentage is equal to net profit divided by net sales, so Lowe’s net profit margin percentage was 5.97%. Lowe’s return on assets is equal to net profit margin multiplied by asset turnover, so Lowe’s ROA was 10.3%. 9. *See Second Page...
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