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 $ 940,000 Net operating income $ 36000 Average operating assets 100,000 The following questions are to be considered independently. 1- Assume that the manager of the club is able to reduce expenses by $3,760 without any change in sales or operating assets. What would be the club’s return on investment (ROI)? 2- Assume that the manager of the club is able to reduce operating assets by $20,000 without any change in sales or net operating income. What would be the club’s return on investment (ROI)? ( Do not intermediate calculations. Round your answer to 2 decimal places.
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
| Sales | $ | 940,000 |
| Net operating income | $ | 36000 |
| Average operating assets | 100,000 | |
The following questions are to be considered independently.
1- Assume that the manager of the club is able to reduce expenses by $3,760 without any change in sales or operating assets. What would be the club’s return on investment (ROI)?
2- Assume that the manager of the club is able to reduce operating assets by $20,000 without any change in sales or net operating income. What would be the club’s return on investment (ROI)? ( Do not intermediate calculations. Round your answer to 2 decimal places.
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