Mary Jane is an upscale retailer for women’s clothing with stores in many high-end shopping centers across the United States. In recent years, sales in most of the stores, especially the company’s flagship store in the midtown of Manhattan, have been declining since Mary Jane is increasingly selling its clothing through its website. Not willing to give up on its flagship store, senior management at headquarters hired Susan Marcos 2 years ago to turn around the New York City store. The company is currently evaluating all its division managers using return on investment. The flagship store’s financial performance in 2019 and 2020 was as follows (in thousands):

Required

1. Calculate the flagship store’s ROI for 2020.
2. The company has a corporate-wide policy of not paying out a bonus when a division’s ROI is negative. Do you think that the company is making a mistake by not paying Susan Marcos a bonus for 2020?
3. How could the company change its bonus program so that Susan Marcos could receive a bonus for 2020?

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Operating Income 2019 2020 -$5,000 -$2,000 Revenues 2019 $30,000 2020 $35,000 Total Assets 2019 $40,000 2020 $45,000