Asked by Vaughn Lawrence on Jul 27, 2024

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Which of the following will not result in an increase in return on investment (ROI) , assuming other factors remain the same?

A) A reduction in expenses.
B) An increase in net operating income.
C) An increase in operating assets.
D) An increase in sales.

Operating Assets

Assets used in the day-to-day operations of a business to generate income.

Net Operating Income

A company's operating profit after subtracting operating expenses from gross profit, excluding taxes and interest payments.

Reduction In Expenses

Actions or strategies implemented by an organization aimed at decreasing its total costs or expenditures to improve profitability.

  • Understand the application and consequences of return on investment (ROI) in assessing managerial performance.
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MZ
michell zhengJul 30, 2024
Final Answer :
C
Explanation :
An increase in operating assets will result in a decrease in ROI, as ROI is calculated by dividing net operating income by total assets. Therefore, increasing the denominator (operating assets) will decrease ROI.