PB1. LO 9.

3 Use the following information from Exercise EB3 to answer the questions that
follow.

A. Calculate the operating income percentage for each of the stores. Comment on how your
analysis has changed for each store.
B. Perform a vertical analysis for each store. Based on your analysis, what accounts would
you want to investigate further? How might management utilize this information?
C. Which method of analysis (using a dollar value or percentage) is most relevant and/or
useful? Explain.
PB2. LO 9.3 Use Kellogg’s 2017 annual report
(https://s1.q4cdn.com/243145854/files/doc_financials/2017/ar/2017-Annual.pdf) to answer the
following questions.
A. Using the information for Kellogg’s, calculate the operating profit percentage for each of
the divisions. Comment on how your analysis has changed compared to your analysis of the
dollar amounts for each division.
B. Using total assets as the investment, calculate the ROI for each division. In the total
assets information you compile, you should ignore corporate and elimination entries amounts
and you will also need to combine the U.S. divisions into a North American total. Comment
on the results.
C. Assume that Kellogg’s uses a cost of capital of 10%. Calculate the RI for each of the
divisions (you will need to condense the U.S. divisions into a North American total).
Comment on the results.