How will increases in the following items affect return on investment (ROI)?
$\begin{array} { l c c }
& \text { Increase in Expenses } & \text { Increase in Inventury } \\end{array}$
A) $\begin{array} { l c c } & \text { Decrease ROI } &&&& \text { Decrease ROI } \\end{array}$
B)$\begin{array} { l c c } & \text { Decrease ROI } &&&& \text { Increase ROI } \\end{array}$
C)$\begin{array} { l c c } & \text { Increase ROI } &&&& \text { Decrease ROI } \\end{array}$
D)$\begin{array} { l c c } & \text { Increase ROI } &&&& \text { Increase ROI } \\end{array}$

Question

How will increases in the following items affect return on investment (ROI)?
$\begin{array} { l c  c  } 
 & \text { Increase in Expenses } & \text { Increase in Inventury } \\end{array}$
A) $\begin{array} { l c  c  } & \text { Decrease ROI } &&&& \text { Decrease ROI } \\end{array}$
B)$\begin{array} { l c  c  }   & \text { Decrease ROI } &&&& \text { Increase ROI } \\end{array}$
C)$\begin{array} { l c  c  }  & \text { Increase ROI } &&&& \text { Decrease ROI } \\end{array}$
D)$\begin{array} { l c  c  } & \text { Increase ROI } &&&& \text { Increase ROI } \\end{array}$

Quizplus · Accepted Answer

An increase in expenses typically reduces net income, leading to a decrease in ROI. An increase in inventory ties up capital and may not immediately contribute to revenue, also decreasing ROI.

How Will Increases in the Following Items Affect Return on Investment