What is the restaurant sales-total assets turnover ratio

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Reference no: EM131519025

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?

Reference no: EM131519025

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