If the turnover increased by 30 percent and the margin decreased by 30 percent, the ROI would
A)decrease by 9 percent.
B)increase by 69 percent.
C)increase by 91 percent.
D)stay the same.

Question

Quizplus · Accepted Answer

ROI = (Net profit/Total investment)*100
Let's say the original net profit was $100 and the total investment was $1000, so the original ROI would be 10%.
Now, if the turnover increases by 30%, it becomes $130, but the margin decreases by 30%, so the net profit becomes $70 (i.e., 70% of $100). 
So, the new ROI would be (70/1000)*100 = 7%
Therefore, the ROI decreases by 3 percentage points, which is equal to 9% of the original ROI.

If the Turnover Increased by 30 Percent and the Margin