Asked by Logan Sisson on Apr 24, 2024
Verified
Panera Bread Company is a national bakery-cafe concept with 1,380 Company-owned and franchise-operated bakery-cafe locations in 40 states and in Ontario,Canada.The company has grown from serving approximately 60 customers a day at its first bakery-cafe to currently serving nearly six million customers a week system-wide,becoming one of the largest food service companies in the United States.Sara Lee Corporation is a global manufacturer and marketer of high-quality,brand-name products for consumers throughout the world focused primarily on the meats,bakery and beverage categories.Selected financial information about each company follows:
Sara Lee Panera Bread Sales $10,793 million $1,353.5 million Net Income $527 million $86.8 million Return on Assets (ROA) 8.32%11.55% Profit margin 7.05%6.45% Asset turnover 1.181.79\begin{array}{lrr}&\text { Sara Lee }&\text { Panera Bread }\\\text { Sales } & \$ 10,793 \text { million } & \$ 1,353.5 \text { million } \\\text { Net Income } & \$ 527 \text { million } & \$ 86.8 \text { million } \\\text { Return on Assets (ROA) } & 8.32 \% & 11.55 \% \\\text { Profit margin } & 7.05 \% & 6.45 \% \\\text { Asset turnover } & 1.18 & 1.79\end{array} Sales Net Income Return on Assets (ROA) Profit margin Asset turnover Sara Lee $10,793 million $527 million 8.32%7.05%1.18 Panera Bread $1,353.5 million $86.8 million 11.55%6.45%1.79
Required:
a.Why is Sara Lee less profitable than Panera Bread?
b.Return on assets and return on sales in the bakery industry are 4.85% and 8.16%,respectively.How do these two companies compare to their industry and what might explain any noted differences?
Return On Assets
A financial metric that indicates how profitable a company is relative to its total assets, measuring how efficiently a company uses its assets to generate earnings.
Profit Margin
A financial ratio calculated as net income divided by revenue, indicating the percentage of revenue that is retained as profit after accounting for costs and expenses.
Asset Turnover
A metric indicating how effectively a company utilizes its assets to produce sales income.
- Evaluate and distinguish the fiscal results of firms in diverse sectors by employing ratio analysis techniques.
Verified Answer
Feedback:ROA = Profit margin × asset turnover.For example,for Sara Lee,8.32 = 7.05 × 1.18.
Learning Objectives
- Evaluate and distinguish the fiscal results of firms in diverse sectors by employing ratio analysis techniques.
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