Gas Supply Corporation Uses the Investment Center Concept for the Gasoline

question 3

Essay

Gas Supply Corporation uses the investment center concept for the gasoline stations that it manages in the city.Consolidated has a 15% required rate of return on investment in order for a branch station to be viable.Select operating data for three of its stations for 2015 are as follows:
$$\begin{array} { | l | r | r | r | } \hline & \text { Maple Street } & \text { Oak Street } & \text { High Street } \\\hline \text { Revenue } & \$ 17,000,000 & \$ 13,500,000 & \$ 15,000,000 \\\hline \text { Operating assets } & 7,000,000 & 7,000,000 & 6,000,000 \\\hline \text { Net operating income } & 900,000 & 1,200,000 & 980,000 \\\hline\end{array}$$ Required:
a.Compute the return on investment for each station.
b.Which station manager is doing best based only on ROI? Why?
c.Are any of the stations in danger of being closed due to lack of performance?
d.What other factors should be included when evaluating the managers?