Question

How to get part C please?

Check my work Charlie's Furniture Store has been in business for several years. The firm's owners have described the store as a high-price, high- service operation that provides lots of assistance to its customers. Margin has averaged a relatively high 28% per year for several years, but turnover has been a relatively 0.4 based on average total assets of $800.000. A discount furniture Store is about to open in the area served by Charlie's, ar g ement is considering lowering prices to compete effectively Required: a. Calculate current sales and ROI for Charlie's Furniture Store b. Assuming that the new strategy would reduce margin to 20%, and assuming that average total assetsd stay the same calculate the sales that would be required to have the same ROI as Charlie's currently earns c. Suppose you presented the results of your analysis in parts a and b of this problem to Charlie, and he replied, "What are you telling me? Il reduce my prices as planned, then I have to increase my sales volume by 50% to earn the same return? Given the results of your analysis, what is the actual amount of increase in sales required? d. Now suppose Charlie says. "You know, I'm not convinced that lowering prices is my only option in staying competitive. What if were to increase my marketing effort? I'm thinking about kicking off a new advertising campaign after conducting more extensive market research to better identify who my target customer groups are in general, explain to Charlie what the likely impact of a successful strategy of this nature would be on margin, turnover, and ROI e. What are the other alternative strategy that might help Charlie maintain the competitiveness of his business Complete this question by entering your answers in the tabs below. < Prev 4 of 12 !!! Next > Type here to search 1080 acer SW AJO 15 CM) 660= 7 8 9101 1121er mase rammer og

Answer 1

Dear Student ,

As per Question , student mainly looking answer for part C . I have answered all first 4 ( a to d) .

Please check line by line ,

Thank You !!

Answer a	Turnover has relatively low 0.4 based on Average total Asset $800,000
	Sales $ Turnover*Avg Total Assets)	3,20,000	(0.4*$800000)
	Customer margin has average a relatively high 28% per year
	ROI =(Turnover*Margin)	11.2%	( 0.4*28%)
Answer b	Maintain same ROI =11.2%
	Margin slightly reduced =20%
	ROI = Margin * Turnover
	11.20%	20% * Turnover
	So Turnover(ROI/Margin)		0.56	(11.2%/20%)
	So revised revenue number would be = 0.56* $800000				4,48,000
	Revenue $ 448000
Answer c
	From Answer a and b - Noticed that Sales / Revenue increase by
	$448000-$320000		1,28,000
	Margin also reduced from 28% to 20%
	to maintain same ROI
	So increase in revenue would be			$128000/$320000
	So increase in revenue would be			40%
	In this sitiation Sales need not be double due to reduced in Margin . Sale only increase by 40% instead of 50%
Answer d	Cinducting more extensive marketing research might increae
	Operation cost and impact on Margin ( reduced ()
	But in future with hep of this extensive marketing cost ,
	company can boost Revenue and will improve ROI . Finally
	this increase ROI will offset with margin Loss .