If a company must decrease its sales price of a product while all of the company's expenses remain constant, what will happen to return on investment (ROI)?
A)ROI will decrease.
B)ROI will increase.
C)ROI will not be affected.
D)We cannot determine the effect from the information provided.

Question

Quizplus · Accepted Answer

When the sales price decreases and expenses remain constant, the profit margin of the company decreases. As ROI is calculated by dividing the profit by the investment, a decrease in profit will result in a decrease in ROI.

If a Company Must Decrease Its Sales Price of a Product