Question
Red Rooster Burgers is a Canadian owned franchise. The store managers in each location across Canada are evaluated based on the individual restaurant's return on
Red Rooster Burgers is a Canadian owned franchise. The store managers in each location across Canada are evaluated based on the individual restaurant's return on investment (ROI). The company requires an ROI of 30% or higher. Bill, the Kelowna restaurant manager has set a goal to increase the Kelowna restaurant's sales by $250,500 in the upcoming year. He believes this will increase the restaurants net operating income by $45,000. If he is able to meet this goal, assuming no increase in operating assets, what will the new ROI for the restaurant be? Sales Net operating income $2,500,000 $625,000 Average operating assets $2,200,000 Required: 1. Calculate the current Kelowna location's ROI. Does it meet the company's required ROI? (2 marks) (show calculations) 2. Calculate the ROI if the Kelowna location meets Bill's goal. Does it meet the company's required ROI? (2 marks) (show calculations)
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