Question

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

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 $ 850,000 Net operating income $ 25,500 Average operating assets $ 100,000

6.value: 10.00 pointsRequired information Required: 1. 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).) rev: 08_01_2016_QC_CS-56541

Margin = ?

Turnover = ?

ROI = ?

7.value: 10.00 pointsRequired information 2. Assume that the manager of the club is able to increase sales by $85,000 and that, as a result, net operating income increases by $7,225. 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 = ?

8.value: 10.00 pointsRequired information 3. Assume that the manager of the club is able to reduce expenses by $3,400 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).)

Margin = ?

Turnover = ?

ROI = ?

9.value: 10.00 pointsRequired information 4. Assume that the manager of the club is able to reduce operating assets by $50,000 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).)

Margin = ?

Turnover = ?

ROI = ?

Homework Answers

Answer #1

The solution for each of the problems is given in the following table:

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have...
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 $ 810,000 Net operating income $ 21,060 Average operating assets $ 100,000 The following questions are to be considered independently. 1. Compute the Springfield club’s return on investment (ROI). (Do not round intermediate calculations. Round your...
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).
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$730,000Net operating income$13,140Average operating assets$100,000Required:1. Compute the Springfield club’s return on investment (ROI).(Round your answers to 2 decimal places.)Margin1.80%Turnover7.30timesROI13.14%2. Assume that the manager of the club is able to increase sales by $73,000 and that, as a result,...
Solano Company has sales of $740,000, cost of goods sold of $490,000, other operating expenses of...
Solano Company has sales of $740,000, cost of goods sold of $490,000, other operating expenses of $46,000, average invested assets of $2,200,000, and a hurdle rate of 10 percent. Required: 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.)...
Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected...
Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama Sales $ 10,800,000 $ 38,000,000 Net operating income $ 648,000 $ 3,040,000 Average operating assets $ 3,600,000 $ 19,000,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for...
Compute the return on asset ratio for Year 2 given the following data: (Enter your answer...
Compute the return on asset ratio for Year 2 given the following data: (Enter your answer as a percentage rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34).) Total asset turnover year 2: 2.10 Year 1: 1.90 Net profit margin Year 2: 12.00 % Year 1: 10.00 %
Wescott Company has three divisions: A, B, and C. The company has a hurdle rate of...
Wescott Company has three divisions: A, B, and C. The company has a hurdle rate of 8 percent. Selected operating data for the three divisions are as follows: Division A Division B Division C Sales revenue $ 1,260,000 $ 939,000 $ 920,000 Cost of goods sold 779,000 689,000 668,000 Miscellaneous operating expenses 65,000 53,000 54,000 Interest and taxes 49,000 42,000 42,000 Average invested assets 8,473,000 1,977,000 3,254,000 Wescott is considering an expansion project in the upcoming year that will cost...
[The following information applies to the questions displayed below.] Westerville Company reported the following results from...
[The following information applies to the questions displayed below.] Westerville Company reported the following results from last year’s operations: Sales $ 2,200,000 Variable expenses 660,000 Contribution margin 1,540,000 Fixed expenses 1,100,000 Net operating income $ 440,000 Average operating assets $ 1,375,000 At the beginning of this year, the company has a $275,000 investment opportunity with the following cost and revenue characteristics: Sales $ 440,000 Contribution margin ratio 60 % of sales Fixed expenses $ 220,000 The company’s minimum required rate...
Type or paste question her Financial data for Stirling, Inc., for last year are as follows:...
Type or paste question her Financial data for Stirling, Inc., for last year are as follows: Stirling, Inc. Balance Sheet   Beginning    Balance Ending Balance Assets   Cash $ 145,000      $ 142,000       Accounts receivable 352,000      496,000       Inventory 587,000      502,000       Plant and equipment, net 910,000      894,000       Investment in Brier Company 423,000      447,000       Land (undeveloped) 258,000      262,000       Total assets $ 2,675,000      $ 2,743,000     Liabilities and Stockholders' Equity   Accounts payable $ 399,000      $ 357,000       Long-term debt 1,016,000      1,016,000       Stockholders' equity 1,260,000      1,370,000       Total liabilities...
E10-7 Evaluating Managerial Performance Using Return on Investment, Residual Income [LO 10-4, 10-5] Orange Corp. has...
E10-7 Evaluating Managerial Performance Using Return on Investment, Residual Income [LO 10-4, 10-5] Orange Corp. has two divisions: Fruit and Flower. The following information for the past year is available for each division: Fruit Division Flower Division Sales revenue $ 1,560,000 $ 2,340,000 Cost of goods sold and operating expenses 1,170,000 1,755,000 Net operating income $ 390,000 $ 585,000 Average invested assets $ 4,875,000 $ 2,437,500     Orange has established a hurdle rate of 6 percent.    Required: 1-a. Compute each...
Coolbrook Company has the following information available for the past year:    River Division Stream Division...
Coolbrook Company has the following information available for the past year:    River Division Stream Division Sales revenue $ 1,201,000 $ 1,810,000 Cost of goods sold and operating expenses 888,000 1,297,000 Net operating income $ 313,000 $ 513,000 Average invested assets $ 1,090,000 $ 1,550,000 The company’s hurdle rate is 6.51 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. (Enter your ROI answers as a percentage rounded to two decimal places,...