Fitness Fanatics is a regional chain of health clubs. Themanagers of the clubs, who have authority to make investments asneeded, are evaluated based largely on return on investment (ROI).The company's Springfield Club reported the following results forthe past year:
Sales $ 710,000 Net operatingincome $ 11,360 Average operatingassets $ 100,000
1. Compute the Springfield clubâsreturn on investment (ROI). (Round your Turnover answer to2 decimal places. Round your Margin and ROI percentage answers to 2decimal places (i.e., 0.1234 should be entered as12.34).)
Assume that the manager of the club is able to increase sales by$71,000 and that, as a result, net operating income increases by$5,041. Further assume that this is possible without any increasein operating assets. What would be the clubâs return on investment(ROI)? (Round your Turnover answer to 2 decimal places.Round your Margin and ROI percentage answers to 2 decimal places(i.e., 0.1234 should be entered as 12.34).)
3. Assume that the manager of the club is able to reduce expensesby $2,840 without any change in sales or operating assets. Whatwould be the clubâs return on investment (ROI)? (Round yourTurnover answer to 2 decimal places. Round your Margin and ROIpercentage answers to 2 decimal places (i.e., 0.1234 should beentered as 12.34).)
4. Assume that the manager of the club is able to reduce operatingassets by $50,000 without any change in sales or net operatingincome. What would be the clubâs return on investment (ROI)?(Round your Turnover answer to 2 decimal places. Round yourMargin and ROI percentage answers to 2 decimal places (i.e., 0.1234should be entered as 12.34).)
Fitness Fanatics is a regional chain of health clubs. Themanagers of the clubs, who have authority to make investments asneeded, are evaluated based largely on return on investment (ROI).The company's Springfield Club reported the following results forthe past year: |
Sales | $ | 710,000 | |||||||||||||||
Net operatingincome | $ | 11,360 | |||||||||||||||
Average operatingassets | $ | 100,000 | |||||||||||||||
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