Question

As she digs deeper into the data, Ophelia realizes that while discounters do have a high profit level, discounters are quite low in terms of return on sales. How can this be explained?

Answer 1

Answer: Return on sales is calculated based on sales volume and not profit

Explanation:

This can be explained by understanding the scenario; the price that discounters pay is lower than any other channel. Discounters have high variable cost, they only pay $52 for the Russel with 41percent return on sales. They also larger fixed costs than the other channels and the return on sales is calculated based on sales volume and not profit.