If the sales margin of .4 percent remained unchanged and the capital turnover of 4.0 increased by 15 percent, the return on investment would
A) Increase by 10 percent
B) Decrease by 15 percent
C) Increase by 15 percent
D) Stay the same

Question

Quizplus · Accepted Answer

The return on investment (ROI) is calculated as the product of the sales margin and the capital turnover. If the capital turnover increases by 15 percent, the ROI, being directly proportional to the capital turnover while the sales margin remains unchanged, would also increase by 15 percent.

If the Sales Margin of