Assuming that sales and operating income remain the same,which of the following statements about a company's return on investment is correct?
A) It will increase if operating assets increase.
B) It will decrease if operating assets decrease.
C) It will decrease if turnover decreases.
D) It will decrease if turnover increases.

Question

Quizplus · Accepted Answer

Return on investment (ROI) is calculated as operating income divided by operating assets. If sales and operating income remain the same, but turnover (which is sales divided by operating assets) decreases, it implies that operating assets have increased without a corresponding increase in sales or operating income, thus decreasing ROI.

Assuming That Sales and Operating Income Remain the Same,which of the Following