Asked by Celeste Machado on Apr 30, 2024
Verified
All other things being equal, a company's return on investment (ROI) would generally increase when:
A) average operating assets increase.
B) sales decrease.
C) operating expenses increase.
D) operating expenses decrease.
Operating Expenses
Costs related to the normal operations of a business, excluding costs of goods sold, such as sales and marketing expenses.
Average Operating Assets
The average value of assets used in the production or operations of a company over a specific period, often used in performance metrics like return on investment.
Sales
Sales pertain to the revenue a company generates through the selling of goods or services to its customers.
- Ascertain the impact of variations in sales, costs, and operational assets on key financial performance indicators.
- Pinpoint the variables that have an impact on investment returns and understand how decisions made by management can influence these variables.
Verified Answer
NS
Naeemah SandersMay 03, 2024
Final Answer :
D
Explanation :
Return on Investment (ROI) is calculated as (Net Operating Income / Average Operating Assets). Decreasing operating expenses increases net operating income, thus increasing ROI.
Learning Objectives
- Ascertain the impact of variations in sales, costs, and operational assets on key financial performance indicators.
- Pinpoint the variables that have an impact on investment returns and understand how decisions made by management can influence these variables.