Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Part 1: Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as needed, are

Part 1:

Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as needed, are evaluated based largely on return on investment (ROI). The company's Springfield Club reported the following results for the past year:

image text in transcribedPart 2: Assume that the manager of the club is able to increase sales by $78,000 and that, as a result, net operating income increases by $6,084. Further assume that this is possible without any increase in average operating assets. What would be the clubs return on investment (ROI)? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Part 3: Assume that the manager of the club is able to reduce expenses by $3,120 without any change in sales or average operating assets. What would be the clubs return on investment (ROI)? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Part 4: Assume that the manager of the club is able to reduce average operating assets by $20,000 without any change in sales or net operating income. What would be the clubs return on investment (ROI)? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Required information The following information applies to the questions displayed below.] Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as needed, are evaluated based largely on return on investment (ROI). The company's Springfield Club reported the following results for the past year: Sales Net operating income Average operating assets $ 780,000 $17,940 100,000 The following questions are to be considered independently Required: 1. Compute the Springfield club's return on investment (ROI). (Do not round intermediate calculations. Round your answer to 2 decimal places.) Return on investment (ROI)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

How can data capture processes be improved to improve data quality?

Answered: 1 week ago