Required information Exercise 11-12 (Algo) Effects of Changes in Profits and Assets on Return on Investment (ROI) [LO11-1] [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 Net operating income Average operating assets The following questions are to be considered independently. $ 930,000 $ 35,340 $ 100,000 Exercise 11-12 Part 4 (Algo) 4. Assume that the manager of the club is able to reduce average operating assets by $40,000 without any change in sales or net operating income. What would be the club's return on investment (RO)? (Do not round intermediate calculations. Round your answe to 2 decimal places.) Relum on investment (ROI)

Required information Exercise 11-12 (Algo) Effects of Changes in Profits and Assets on Return on Investment (ROI) [LO11-1] [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 Net operating income Average operating assets The following questions are to be considered independently. $ 930,000 $ 35,340 $ 100,000 Exercise 11-12 Part 4 (Algo) 4. Assume that the manager of the club is able to reduce average operating assets by $40,000 without any change in sales or net operating income. What would be the club's return on investment (RO)? (Do not round intermediate calculations. Round your answe to 2 decimal places.) Relum on investment (ROI)

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 14.16E

See similar textbooks

Similar questions

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 Net operating income Average operating assets $ 720,000 12,240 $ 100,000 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)?
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 Net operating income Average operating assets 720,000 $ 12,240 $ 100,000 The following questions are to be considered independently. Assume that the manager of the club is able to reduce expenses by $2,880 without any change in sales or average operating assets. What would be the club's return on investment (ROI)?
Effects of Changes in Profits and Assets 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: Required: The following questions are to be considered independently. Carry out all computations to two decimal places. 1. Compute the Springfield club’s return on investment (ROI). 2. Assume that the manager of the club is able to increase sales by $70,000 and that, as a result, net operating income increases by $18,200. Further assume that this is possible without any increase in average operating assets. What would be the club’s return on investment (ROI)? 3. Assume that the manager of the club is able to reduce expenses by $14,000 without any change in sales or average operating assets. What would be the club’s return on investment (ROI)? 4.…
How can get this problem resolve? 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. 4. Assume that the manager of the club is able to reduce average operating assets by $40,000 without any change in sales or net operating income. What would be the club’s return on investment
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 $ 940,000 Net operating income $ 36000 Average operating assets 100,000 The following questions are to be considered independently. 1- Assume that the manager of the club is able to reduce expenses by $3,760 without any change in sales or operating assets. What would be the club’s return on investment (ROI)? 2- 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)? ( Do not intermediate calculations. Round your answer to 2 decimal places.
Pecs Alley is a regional chain of health clubs. The managers of the clubs, who have authority to makeinvestments as needed, are evaluated based largely on return on investment (ROI). The Springfield Clubreported the following results for the past year:Sales .................................................................................. $1,400,000Net operating income ......................................................... $70,000Average operating assets ................................................... $350,000Required:The following questions are to be considered independently. Carry out all computations to two decimalplaces.1. Compute the club’s return on investment (ROI).2. Assume that the manager of the club is able to increase sales by $70,000 and that, as a result, netoperating income increases by $18,200. Further assume that this is possible without any increase inoperating assets. What would be the club’s return on investment (ROI)?3. Assume that the manager of the club is…
Refresh Resorts, Inc., operates health spas in Key West, Florida; Phoenix, Arizona; and Carmel, California. The Key West spa was the company’s first and opened in 1991. The Phoenix spa opened in 2004, and the Carmel spa opened in 2013. Refresh Resorts has previously evaluated divisions based on RI, but the company is considering changing to an EVA approach. All spas are assumed to face similar risks. Data for 2017 are: Q.Calculate RI for each of the spas based on operating income and using total assets as the measure of investment. Suppose that the Key West spa is considering adding a new group of saunas from Finland that will cost $225,000. The saunas are expected to bring in operating income of $22,000. What effect would this project have on the RI of the Key West spa? Based on RI, would the Key West manager accept or reject this project? Without resorting to calculations, would the other managers accept or reject the project? Why?
control risk, inherent risk, detection risk, RMM? Explain why? IR/CR yes or no? RMM and DR increase,decrease or no effect? Factor IR Factor CR Factor Why? Comments Impact on RMM Impact on DR 1 Apollo advanced $1.25 million to Larry Lancaster’s secretary. 2 Apollo does not have adequate documentation supporting customer returns of product. 3 Apollo has maintained a positive trend in net income over the past several years, and has a strategic emphasis on meeting profitability targets. 4 Apollo has not allowed your firm to speak with the predecessor auditor about their withdrawal after last year’s engagement. 5 Apollo installed a new computer system mid-year.
A family friend has asked your help in analyzing the operations of three anonymous companies operatingin the same service sector industry. Supply the missing data in the table below:CompanyA B CSales .............................................................. $9,000,000 $7,000,000 $4,500,000Net operating income ................................... $ ? $ 280,000 $ ?Average operating assets ............................. $3,000,000 $ ? $1,800,000Return on investment (ROI) .......................... 18% 14% ?Minimum required rate of return:Percentage ................................................ 16% ? 15%Dollar amount ............................................ $ ? $ 320,000 $ ?Residual income ............................................ $ ? $ ? $ 90,000
. Refresh Resorts, Inc., operates health spas in Key West, Florida; Phoenix, Arizona; and Carmel, California. The Key West spa was the company’s first and opened in 1991. The Phoenix spa opened in 2004, and the Carmel spa opened in 2013. Refresh Resorts has previously evaluated divisions based on RI, but the company is considering changing to an EVA approach. All spas are assumed to face similar risks. Data for 2017 are: Q.Refer back to the original data. Calculate the WACC for Refresh Resorts.
Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center). Investment Center Sales Income AverageInvested Assets Electronics $ 40,000,000 $ 2,880,000 $ 16,000,000 Sporting goods 20,000,000 2,040,000 12,000,000 Exercise 22-10 Computing return on investment and residual income; investing decision LO A1 1. Compute return on investment for each department. Using return on investment, which department is most efficient at using assets to generate returns for the company?2. Assume a target income level of 12% of average invested assets. Compute residual income for each department. Which department generated the most residual income for the company?3. Assume the Electronics department is presented with a new investment opportunity that will yield a 15% return on investment. Should the new investment opportunity be accepted?
New rules for human capital disclosure were implemented in 2020, and many companies have been increasing the information provided in public filings like 10-Ks. Some areas for improvement, however, include which of the following: Question 4Answer a. Reporting on employee demographics b. Reporting more specific outcomes like safety incidents, rather than just policies in place c. Reporting on supply chain issues related to human resources d. Both B and C e. All of the above