Question

Taco Hut is a restaurant chain that has 3 restaurants located throughout Canada, each of which is an investment centre.

The company’s 20x9 financial information is as follows:

	Restaurant 1	Restaurant 2	Restaurant 3
Revenues	$896248	$1149008	$653152
Variable costs	197972	311710	200180
Fixed costs	382796	600843	377907

ROI	36.6%	25.4%	15.6%
RI	$221470	$177091	$27287

Based on the information above, what are Taco Hut’s total assets?

Select one:

a. $2274078

b. $2423969

c. $796844

d. $187235

Answer 1

Taco Hut’s total assets = Restaurant 1 assets + Restaurant 2 assets + Restaurant 3 assets

ROI = Operating income / Total assets

Operating income = Revenues - Variable costs - Fixed costs

Restaurant 1

ROI = Operating income / Total assets

36.6% = ($896,248 - $197,972 - $382,796) / Total assets

Total assets = ($896,248 - $197,972 - $382,796) / 36.6%

Total assets = $315,480 / 36.6%

Total assets = $861,967

Restaurant 2

ROI = Operating income / Total assets

25.4% = (1,149,008 - $311,710 - $600,843) / Total assets

Total assets = (1,149,008 - $311,710 - $600,843) / 25.4%

Total assets = $236,455 / 25.4%

Total assets = $930,925

Restaurant 3

ROI = Operating income / Total assets

15.6% = ($653,152 - $200,180 - $377,907) / Total assets

Total assets = ($653,152 - $200,180 - $377,907) / 15.6%

Total assets = $75,065 / 15.6%

Total assets = $481,186

Taco Hut’s total assets = Restaurant 1 Total assets + Restaurant 2 Total assets + Restaurant 3 Total assets

Taco Hut’s total assets = $861,967 + $930,925 + $481,186

Taco Hut’s total assets = $2,274,078