The manager of Pearless Company's Toy Division is not satisfied with the level of return on investment that the division achieved this year.What can be done to improve return on investment?
A) Decrease the investment in assets
B) Increase operating expenses
C) Increase sales
D) Decrease the investment in assets and/or increase sales.

Question

Quizplus · Accepted Answer

Decreasing the investment in assets alone may not be a feasible option as it may affect the division's ability to produce and sell toys. Therefore, the best option is to decrease the investment in assets and/or increase sales. By decreasing the investment in assets, the division can maximize the return on its existing assets. At the same time, increasing sales can increase the revenue and also help spread the fixed cost over a larger volume, resulting in a better return on investment. Increasing operating expenses alone may not improve return on investment if it does not lead to increased sales or higher efficiency.

The Manager of Pearless Company's Toy Division Is Not Satisfied