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Unformatted text preview: ROI analysis using DuPont model. Charlie?s Furniture Store has been in business for several years. The firm?s owners have described the store as a ?high-price, highservice? operation that provides lots of assistance to its customers. Margin has averaged a relatively high 32% per year for several years, but turnover has been a relatively low 0.4 based on average total assets of $800,000. A discount furniture store is about to open in the area served by Charlie?s, and management is considering lowering prices in order to compete effectively. Required: a. Calculate current sales and ROI for Charlie?s Furniture Store. b. Assuming that the new strategy would reduce margin to 20%, and assuming that average total assets would stay the same, calculate the sales that would be required to have the same ROI as they currently earned. c. Suppose that you presented the results of your analysis in parts a and b of this problem to Charlie, and he replied, ?What c....
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This note was uploaded on 09/03/2010 for the course ACCOUNTING 122 taught by Professor Thomas during the Spring '10 term at Claflin University.
- Spring '10