Which of the following will cause an increase in ROI?
A) An increase in variable costs
B) An increase in average operating assets
C) An increase in sales
D) An increase in controllable fixed costs

Question

Quizplus · Accepted Answer

ROI (Return on Investment) is calculated by dividing Net Income by Average Operating Assets. Increasing sales will result in an increase in net income, which will directly lead to an increase in ROI. The other choices will decrease ROI - an increase in variable costs, an increase in average operating assets, and an increase in controllable fixed costs will decrease net income, resulting in a decrease in ROI.

Which of the Following Will Cause an Increase in ROI