A division's return on investment may be improved by increasing:
A) cost of goods sold and expenses.
B) sales margin and cost of capital.
C) sales revenue and cost of capital.
D) capital turnover or sales margin.
E) capital turnover or cost of capital.

Question

Quizplus · Accepted Answer

A division's return on investment (ROI) can be improved by either increasing the capital turnover (how efficiently the division uses its assets to generate sales) or by increasing the sales margin (the profit made on each sale). Both of these actions would lead to a higher ROI by either generating more sales from the same asset base or by making more profit from each sale, respectively.

A Division's Return on Investment May Be Improved by Increasing