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Kingsville Inc.'s managers are considering alternative strategies to improve ROI from its current budgeted 20% for the coming year. Alternative 1 has more money spent
Kingsville Inc.'s managers are considering alternative strategies to improve ROI from its current budgeted 20% for the coming year. Alternative 1 has more money spent on advertising to increase sales while alternative 2 has the budget for meals and entertainment expenses eliminated with a drop off in sales as a result. Adjustments to operating assets are anticipated in each of the two alternatives as well. The numbers as in the original budget and in the two alternatives are set out below: Original Budget Alternative 1 Alternative 2 Sales 100,000 120,000 95,000 Operating expenses 80,000 90,000 75,000 Average operating assets 100,000 105,000 93,000 What is the relative ranking based upon ROI of the above three choices (highest to lowest)? a) Original Budget, Alternative 1, Alternative 2. b) Alternative 1. Alternative 2, Original Budget. c) Alternative 2, Original Budget, Alternative 1. d) Original Budget, Alternative 2. Alternative 1
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