! Required information [The following information applies to the questions displayed below.] 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, I'm 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 Operating income Invested capital $4,800,000 360,000 6,000,000 In an effort to make something out of nothing and to salvage the current year's performance, Washburn was contemplating implementation of some or all of the following four strategies: a. Write off and discard $60,000 of obsolete inventory. The company will take a loss on the disposal. b. Accelerate the collection of $80,000 of overdue customer accounts receivable. c. Stop advertising through year-end and drastically reduce outlays for repairs and maintenance. These actions are expected to save the division $150,000 of expenses and will conserve cash resources. d. Acquire two competitors that are expected to have the following financial characteristics: Projected Operating Expenses $2,400,000 4,120,000 Projected Sales $3,000,000 4,500,000 Projected Invested Capital $5,000,000 4,750,000 Anderson Manufacturing Palm Beach Enterprises 3. Are there possible long-term problems associated with strategy c? Yes Req 4A Reg 4B Determine the ROI of the investment in Anderson Manufacturing and do the same for the investment in Palm Beach Enterprises ROI Anderson Manufacturing Palm Beach Enterprises % % Reg 4A Req 4B If Washburn wants to maximize ROI, what should the company do? If Washburn wants to maximize ROI, what should the company do?