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 $ 1,400,000 Net operating $ 70,000 income Average $ 350,000 operating assets
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 $ 1,400,000 Net operating $ 70,000 income Average $ 350,000 operating assets
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
1. Compute the Springfield club’s
2. Assume that the manager of the club is able to increase sales by $70,000 and that, as a result, net operating income increases by $18,200. Further assume that this is possible without any increase in operating assets. What would be the club’s return on investment (ROI)?
3. Assume that the manager of the club is able to reduce expenses by $14,000 without any change in sales or operating assets. What would be the club’s return on investment (ROI)?
In addition of finding the ROI for each question, can you help me also to find the Margin and Turnover value for each question from 1-3 also? Thanks a lot for your help!
Transcribed Image Text: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
$ 1,400,000
Net operating
$
70,000
income
Average
$
350,000
operating assets
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