Question
FitPlus is a regional chain of health clubs. Each clubs manager has the authority to make investments as needed and is evaluated based largely on
FitPlus is a regional chain of health clubs. Each clubs manager has the authority to make investments as needed and is evaluated based largely on ROI. FitPlus Club 52 reported the following results for the past year: |
Sales | $ | 500,000 | |
Operating income | 15,000 | ||
Average operating assets | 80,000 | ||
|
Required: |
The following questions are to be considered independently. |
1. | Compute the clubs ROI. (Do not round intermediate calculations. Round your answer to 2 decimal place.) |
2. | Assume that the manager of the club is able to increase sales by $80,000 and that as a result operating income increases by $6,000. Further assume that this is possible without any increase in operating assets. What would the clubs ROI be? (Do not round intermediate calculations. Round your answer to 2 decimal place.) |
3. | Assume that the manager of the club is able to reduce expenses by $3,200 without any change in sales or operating assets. What would the clubs ROI be? (Do not round intermediate calculations. Round your answer to 2 decimal place.) |
4. | Assume that the manager of the club is able to reduce operating assets by $20,000 without any change in sales or operating income. What would the clubs ROI be? (Do not round intermediate calculations.) |
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