Which of the following can improve a company's return on investment?
I.Increase the profit margin
II.Decrease total assets
III.Decrease the contribution margin
A)I, II, and III
B)I and III
C)II and III
D)I and II

Question

Quizplus · Accepted Answer

I. Increasing the profit margin will increase the net income, which will result in a higher return on investment.
II. Decreasing total assets will lower the denominator in the return on investment formula and result in a higher ratio, indicating a higher return on investment.
III. Decreasing the contribution margin will decrease the gross profit, resulting in a lower net income and a lower return on investment. Therefore, only options I and II will improve a company's return on investment.

Which of the Following Can Improve a Company's Return on Investment