To increase both margin and asset turnover, a manager must
A)increase sales revenue.
B)decrease expenses.
C)increase expenses.
D)decrease sales revenue.

Question

Quizplus · Accepted Answer

Increasing sales revenue would increase both margin and asset turnover. Margin is calculated as revenue minus expenses, so increasing revenue would increase the margin if expenses remain constant. Asset turnover is calculated as revenue divided by assets, so increasing revenue would increase asset turnover if assets remain constant. Decreasing expenses could increase margin, but would decrease asset turnover if revenue remains constant. Increasing expenses or decreasing sales revenue would have the opposite effect on both margin and asset turnover.

To Increase Both Margin and Asset Turnover, a Manager Must