A company with three regional offices of different sizes needs to compare the managers’ performance. The managers will be evaluated based on return on investment (ROI). The following results were reported by each regional branch last year.

Required
1. Compute the regional offices’ ROI.
2. Based on ROI, which regional office is performing better? Explain your answer.
3. Based on profit margin and asset turnover indicators, which regional office, A or B, is performing better?
4. Assuming that revenue and operating profit remain the same, explain the alternatives available to managers from Region B to increase asset turnover.
5. Evaluate what will happen with ROI if the regional office with the lowest asset turnover increases revenue by £30,000, while maintaining operating profit at the same level. Also, evaluate what will happen if the same regional office reduces expenses by £30,000 while maintaining revenue at the same level.

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Revenue Net operating income Average operating asset Region A £9,000,000 £504,000 £1,800,000 Region B £3,000,000 £280,000 £880,000 Region C £4,000,000 £341,000 £1,100,000