4:097 | LTE |
The table below contains the Return on Assets (ROA) and the growth in sales for two
publicly traded hospitality firms - one restaurant and the other a hotel. Compute the
means and standard deviations of the ROA and sales growth. Based on the volatility of
the ROA and growth rate, identify which of the firms is the hotel and which one is the
restaurant. Justify your choice.
Date
Firm A
Firm B
ROA
Sales Growth
ROA
Sales Growth
12/31/2019
5%
1%
13%
0%
12/31/2018
8%
.994
18%
-8%
12/31/2017
6%
34%
15%
-7%
12/31/2016
3%
18%
15%
-3%
12/31/2015
14%
5%
12%
-7%
12/31/2014
11%
8%
14%
-2%
12/31/2013
9%
8%
15%
2%
12/28/2012
9%
.4%
15%
2%
12/30/2011
3%
5%
17%
12%
12/31/2010
7%
15%
6%

You are the owner of a local honda dealership. unlike other dealerships in the area, you take pride in your “no haggle” sales policy. last year, your dealership earned record profits of $1.5 million. however, according to the local chamber of commerce, your earnings were 10 percent less than either of your competitors. in your market, the price elasticity of demand for midsized honda automobiles is 4.5. in each of the last five years, your dealership has sold more midsized automobiles than any other honda dealership in the nation. this entitled your dealership to an additional 30 percent off the manufacturer’s suggested retail price (msrp) in each year. taking this into account, your marginal cost of a midsized automobile is $11,000. what price should you charge for a midsized automobile if you expect to maintain your record sales?