Calculate the Return on Investment (RoI) for the distributor given the following data:
Ganesh is distributor of Jockey. His Jockey business has a monthly turnover of Rs. 8 crore with channel margin equal to 5%. The business requires a total Godown space of 20000 sq feet and the rentals in the godown area are Rs. 25 per sq feet per month. Staff salaries include salesmen salary of Rs 4 lac per month, Godown keepers and delivery boys salary of Rs. 1 lac per month (both included) and computer operator salary of Rs. 50000 per month. Delivery expenses include van running cost of Rs. 10 lac per month for own vehicles and hired van expense of Rs. 5 per month. Depreciation value for Ganesh-owned vans is Rs. 1 lac per month. Overhead costs include electricity, stationary, printer etc and costs Ganesh Rs. 1 lac per month. Jockey has asked Ganesh to necessarily invest in stocks (8 days), credit (2.5 days) and cash on hand (1.5 days). On an average Ganesh has claims pending with Jockey worth equal to 0.5 days of sale. To ensure sufficient investment in the business, Ganesh has taken a loan of Rs 1 crore at an annual rate of 12% to ensure sufficient investment in the business. 

Calculate annual Return on Investment (RoI) for Jockey’s distribution business, assuming a 25 day month, and comment whether RoI is appropriate for Ganesh to continue the business.

Answer rating: 100% (QA)

Formulas Return on Investment Net IncomeNet Investment Net Income Revenue Expenses Revenue Gro... View the full answer