How will decreases in the following items affect return on investment (ROI)?
$\begin{array} { l c c } & \text { Decrease in Sales } & \text { Decrease in Equipment } \\end{array}$
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 decreases in the following items affect return on investment (ROI)?
$\begin{array} {  l  c  c  }  & \text { Decrease in Sales } & \text { Decrease in Equipment } \\end{array}$
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

A decrease in sales typically reduces ROI as it lowers revenue and profit. A decrease in equipment can increase ROI by reducing asset base, assuming profit remains constant or decreases less proportionally.

How Will Decreases in the Following Items Affect Return on Investment