Question

1))

[The following information applies to the questions displayed below.]

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	$	840,000
Net operating income	$	24,360
Average operating assets	$	100,000

Compute the Springfield club’s return on investment (ROI). (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

margrin

]turnover

ROI

2)

Assume that the manager of the club is able to increase sales by $84,000 and that, as a result, net operating income increases by $7,056. Further assume that this is possible without any increase in operating assets. What would be the club’s return on investment (ROI)? (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

margrin

]turnover

ROI

3)

Assume that the manager of the club is able to reduce expenses by $3,360 without any change in sales or operating assets. What would be the club’s return on investment (ROI)? (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

margrin

]turnover

ROI

4)

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)? (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

margrin

]turnover

ROI

Answer 1

Answer :-

Return on investment = Net income ÷ Assets

Q.no	Net operating Income(A)	Operating Assets (B)	Return On Investment (A)÷(B)
01	24,360	100,000	24.36 %
02	31,416*	100,000	31.416%
03	27720**	100,000	27.72%
04	24360	80,000***	30.45%

*Net income increased by $ 7056.

** Expenses reduced by $ 3360.

***Operating Assets reduced by $ 20,000