Fitness Fanatics is a regional chain of health clubs. The managers of the clubs,

Question

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

$

870,000  

  Net operating income

$

27,840

  Average operating assets

$

100,000

2. Assume that the manager of the club is able to increase sales by $87,000 and that, as a result, net operating income increases by $7,569. 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).)

Margin

___%

Turnover

ROI

___%

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:

Explanation / Answer

1)return on investment = 27,840/100,000

= 27.84%

2)sales = $ 870,000+$ 87,000=$ 957,000

net operating income =$ 27,840+$ 7,569

= $ 35,409

margin = $ 35,409/957,000= 3.7%

return on investments = 35,409/100,000= 35.41%

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