Question

The following information applies to the questions displayed below Fitness Fanatics is a regional chain of health . The managers of the clubs, who have Springfield Club reported the following results for the past year thony to make investments as needed, are evaluated vestes the company 230.000 Net operating income Prerage operating assets

Answer 1

(3)

here the net operating income would increase by $2920

therefore, net operating income = $13140 + $2920 = $16060

(A)

profit margin = net operating income/sales

= $16060/$730000

= 2.2%

(B)

investment turnover = sales/average operating assets

= $730000/$100000

= 7.3 times

(C)

return on investment = net operating income/average operating assets

= $16060/$100000

= 16.06%

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(4)

Average operating assets = $100000 - $60000 = $40000

(A)

profit margin = net operating income/sales

= $13140/$730000

= 1.8%

(B)

investment turnover = sales/average operating assets

= $730000/$40000

= 18.25 times

(C)

return on investment = net operating income/average operating assets

= $13140/$40000

= 32.85%