Question
[The following information applies to the questions displayed below.] The Abs Shoppe is a regional chain of health clubs. The managers of the clubs, who
[The following information applies to the questions displayed below.] |
The Abs Shoppe 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 Abs Shoppe reported the following results for the past year: |
Sales | $ | 860,000 |
Net operating income | $ | 26,660 |
Average operating assets | $ | 100,000 |
References
Section BreakExercise 12-12 Effects of Changes in Profits and Assets on Return on Investment (ROI) [LO12-1]
5a
value: 1.11 points
Required information
Exercise 12-12 Part 1
Required: | |
1. | Compute the clubs return on investment (ROI). (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
References
eBook & Resources
WorksheetDifficulty: Medium
Exercise 12-12 Part 1Learning Objective: 12-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
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5b.
value: 1.11 points
Required information
Exercise 12-12 Part 2
2. | Assume that the manager of the club is able to increase sales by $86,000 and that as a result net operating income increases by $7,396. Further assume that this is possible without any increase in operating assets. What would be the clubs return on investment (ROI)? (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
References
eBook & Resources
WorksheetDifficulty: Medium
Exercise 12-12 Part 2Learning Objective: 12-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Check my work
5c
value: 1.11 points
Required information
Exercise 12-12 Part 3
3. | Assume that the manager of the club is able to reduce expenses by $3,440 without any change in sales or operating assets. What would be the clubs return on investment (ROI)? (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
References
eBook & Resources
WorksheetDifficulty: Medium
Exercise 12-12 Part 3Learning Objective: 12-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Check my work
5d
value: 1.11 points
Required information
Exercise 12-12 Part 4
4. | Assume that the manager of the club is able to reduce operating assets by $50,000 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 answers to 2 decimal places.) |
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