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New York Pizza is a Canadian owned franchise. The restaurant managers in each location across Canada are evaluated based on the individual restaurant's return on
New York Pizza is a Canadian owned franchise. The restaurant managers in each location across Canada are evaluated based on the individual restaurant's return on investment (ROI). Margo, the Penticton manager has set a goal to increase her restaurant's sales by $250,000 in the upcoming year. To help achieve her goal, she plans to increase the company's average operating assets by $350,000. She believes this will increase the restaurant's net operating income by $36,000. The company requires an ROI of 35% or higher. Results from prior year. Sales $3,200,000 Net operating income $825,000 Average operating assets $2,300,000 Required: 1. Calculate the Penticton location's ROI from the prior year. Did it meet the company's required ROIZ (2 marks) (show all calculations) 2. Calculate the ROI if the Penticton location is able to meet Margo's goal. Use the information provided by Margo. Does it meet the company's required ROI? (2 marks) (show calculations)
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