Fitness Fanatics is a regional chain of health clubs. The managers of the clubs,
ID: 2579041 • Letter: F
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:
The following questions are to be considered independently.
4. Assume that the manager of the club is able to reduce average operating assets by $20,000 without any change in sales or net operating income. What would be the club’s return on investment (ROI)? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Sales $ 760,000 Net operating income $ 15,960 Average operating assets $ 100,000Explanation / Answer
4. Assume that the manager of the club is able to reduce average operating assets by $20,000 without any change in sales or net operating income. What would be the club’s return on investment (ROI)?
Return on investment : Net operating income*100/average operating assets
= 15960*100/80000
Return on investment = 19.95%
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