The return on investment of a division will increase if the division is able to:
A) increase return on sales and increase investment turnover.
B) increase return on sales or increase investment turnover.
C) increase sales revenue and decrease asset turnover.
D) increase return on sales and/or increase investment turnover.

Question

Quizplus · Accepted Answer

Increasing return on sales and/or increasing investment turnover will both contribute to an increase in the return on investment. Choice A is incorrect as it implies both factors must increase, while only one is necessary. Choice C is incorrect as decreasing asset turnover would harm the return on investment.

The Return on Investment of a Division Will Increase If