1) Calculate the ROI (return on investment) based on the above information. 2) After developing purchasing methods the company is able to save 5% from goods and materials. What is the impact on ROI? 3) What kind of increase in sales would be required to have the same level of improvement in ROI? Please note that variable costs are 2/3 from sales and fixed costs stay on the same level despite the change in sales. 4) The company will be able to rationalize its purchasing and will be able to enter into annual contracts with local suppliers and makes an agreement on fast deliveries. The new method will halve the inventories. a) What is the ROI in this case? b) What is the increase in sales required for a similar change (see task 3)?

James Garage Ltd TURNOVER/SALES 1800000,00 COST OF SALES Variable costs FINANCIAL ASSETS 200000,00 FIXED ASSETS CURRENT ASSETS Tires 560000,00 Rims 420000,00 Accessories 85000,00 Other materials 25000,00 James Garage Ltd TURNOVER/SALES 1800000,00 COST OF SALES Variable costs FINANCIAL ASSETS 200000,00 FIXED ASSETS CURRENT ASSETS Tires 560000,00 Rims 420000,00 Accessories 85000,00 Other materials 25000,00