Question: Imagine you are head of the food and beverage department in a large Los Angeles hotel complex. One of the hotel's restaurants is currently earning an annual ROI of 14% on the $200,000 of assets attributed to the restaurant. The average profit margin on covers served is 40%. The restaurant manager believes that if cover prices were dropped by 10% (the average cover currently provides $20 revenue), there would be a significant increase in ROI. Required
(a) Prior to the proposed price decrease, what is the restaurant's sales/total assets turnover ratio?
(b) If the proposed price decreases were implemented, what level of sales to total assets must be achieved in order to avoid a decline in ROI?
(c) Following on from part (b), how many more covers must be served in order to avoid a decline in ROI