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 $ 720,000 12,240 $ 100,000 The following questions are to be considered independently. 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 club's return on investment (ROI)?
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 $ 720,000 12,240 $ 100,000 The following questions are to be considered independently. 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 club's return on investment (ROI)?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
$ 720,000
12,240
$ 100,000
The following questions are to be considered independently.
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 club's return on investment (ROI)?
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