Kenneth Washburn, head of the Sporting Goods Division of Reliable Products, has just completed a miserable nine months. If it could have gone wrong, it did. Sales are down, income is down, inventories are bloated, and quite frankly, Im beginning to worry about my job, he moaned. Washburn is evaluated on the basis of ROI. Selected figures for the past nine months follow.

Sales	$	8,100,000
Operating income		648,000
Invested capital		9,000,000

In an effort to make something out of nothing and to salvage the current years performance, Washburn was contemplating implementation of some or all of the following four strategies:

1. Write off and discard $93,000 of obsolete inventory. The company will take a loss on the disposal.

2. Accelerate the collection of $123,000 of overdue customer accounts receivable.

3. Stop advertising through year-end and drastically reduce outlays for repairs and maintenance. These actions are expected to save the division $228,000 of expenses and will conserve cash resources.

4. Acquire two competitors that are expected to have the following financial characteristics:

	Projected Sales					Projected Operating Expenses					Projected Invested Capital
Anderson Manufacturing		$	4,560,000				$	3,700,000				$	8,600,000
Palm Beach Enterprises			6,810,000					6,210,000					7,500,000

Required:

1. 2-a. What effect would strategy (a) have had on the Reliables Sporting Goods Divisions ROI had it been implemented sometime during the past nine months?

2. 2-b. What effect would strategy (b) have had on the Reliables Sporting Goods Divisions ROI had it been implemented sometime during the past nine months?