If a company desires to increase ROI,it should consider methods that will decrease
A)Sales revenue.
B)Segment margin.
C)Asset turnover.
D)Average operating assets.

Question

Quizplus · Accepted Answer

ROI (Return on Investment) is calculated by dividing the Net Income by Average Operating Assets. Therefore, to increase ROI, a company needs to increase its net income or decrease its average operating assets. Since decreasing sales revenue or segment margin may lead to a decrease in net income, the best option to consider is to decrease the average operating assets. By decreasing the average operating assets, the company can increase its ROI without affecting its net income or sales revenue.

If a Company Desires to Increase ROI,it Should Consider Methods