The Abs Shoppe is a regional chain of health clubs. The managers of the clubs, w
ID: 2497500 • Letter: T
Question
The Abs Shoppe 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 Abs Shoppe reported the following results for the past year:
The Abs Shoppe 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 Abs Shoppe reported the following results for the past year:
Required 1. Compute the club's return on investment (ROI). your answers to 2 decimal places.) Margin Tunover ROIExplanation / Answer
1) Sales 720,000.00 Net operating Income 12,240.00 Average Operating Assets 100,000.00 Margin = NOI/Sales Margin = 12240/720000 Margin = 1.70% Turover = Sales/NOA Turover = 720,000/100,000 = 7.2 ROI = 1.70%*7.2 = 12.24% 2) Sales 792,000.00 Net operating Income 17,424.00 Average Operating Assets 100,000.00 Margin = NOI/Sales Margin = 17424/792000 Margin = 2.20% Turover = Sales/NOA Turover = 792,000/100,000 = 7.92 ROI = 2.20%*7.92 = 17.42% 3) Sales 720,000.00 Net operating Income 15,120.00 Average Operating Assets 100,000.00 Margin = NOI/Sales Margin = 15120/720000 Margin = 2.10% Turover = Sales/NOA Turover = 720,000/100,000 = 7.2 ROI = 2.10%*7.2 = 15.12% 4) Sales 720,000.00 Net operating Income 12,240.00 Average Operating Assets 80,000.00 Margin = NOI/Sales Margin = 12240/720000 Margin = 1.70% Turover = Sales/NOA Turover = 720,000/80,000 = 9 ROI = 1.70%*9 = 15.30%
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