Which one of the following successful strategies will increase the Return on Assets (ROA)?
A)Increase the investment in assets used in the business.
B)Increase the profit margin.
C)Decrease sales volume.
D)Increase the annual depreciation amounts of long-lived assets.

Question

Quizplus · Accepted Answer

Increasing the profit margin, which can be achieved through cost-cutting, increasing sales prices, or better efficiency, will increase the net income generated by the company for each dollar of assets employed, therefore increasing the ROA. The other options will either decrease sales volume, increase the investment in assets, or decrease net income through a higher depreciation expense, which will negatively affect the ROA.

Which One of the Following Successful Strategies Will Increase the Return