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Corpor ation Income Statement ($ millions) F iscal year ended January 28, 2012 N et cr edit car d r e venues 1, 399 T otal r e venues 6 9,865 C ost of sales 4 7,860 S elling, gener al and administr ative e xpenses 1 4,106 C r edit car d e xpenses 4 46 D epr eciation and amortization 2, 131 E arnings befor e inter est e xpense and income tax es 5, 322 N et inter est e xpense 8 66 E arnings befor e income tax es 4, 456 P r o vision for income tax es 1, 527 N et earnings $ 2,929 income for this year was $3 million, so inter est e xpense was $869 million
Corpor
ation
Income Statement
($ millions)
F
iscal year
ended
January 28, 2012
N
et cr
edit car
d r
e
venues
1,
399
T
otal r
e
venues
6
9,865
C
ost of sales
4
7,860
S
elling, gener
al and administr
ative e
xpenses
1
4,106
C
r
edit car
d e
xpenses
4
46
D
epr
eciation and amortization
2,
131
E
arnings befor
e inter
est e
xpense and income tax
es
5,
322
N
et inter
est e
xpense
8
66
E
arnings befor
e income tax
es
4,
456
P
r
o
vision for income tax
es
1,
527
N
et earnings
$
2,929
income for this year was $3 million, so inter
est e
xpense was $869 million. Assume a statutory
tax r
ate of 35%.
b. Disaggr
egate RO
A into pr
ofit mar
gin (PM) and asset turno
ver (A
T).
Expert Solution
Profit margin= Net income/ Sales
= $2929/ 68466
= 4.28%
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