All of the following statements are true about return on investment (ROI)except:
A)Breaking out ROI into two ratios provides information that helps division managers identify areas for improvement.
B)ROI can be improved by decreasing the operating profit margin.
C)ROI can be calculated using the gross book value method.
D)ROI can be improved by increasing asset turnover.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

ROI is calculated by dividing operating income by average total assets. Operating profit margin is a component of the ROI formula, so decreasing it would decrease ROI. Therefore, statement B is false. The rest of the statements are true.

All of the Following Statements Are True About Return on Investment