The following information was extracted from the accounting records of Florissant Valley Motors: $\begin{array}{lcc}
& \text { Prior Year } & \text { Current Year } \
\text { Margin } & 6.0 & 5.0 \
\text { Tumover } & 2.5 & 3.2
\end{array}$ Florissant Valley's ROI for the current year is
A)greater than for the prior year due to the change in turnover.
B)greater than for the prior year due to the change in margin.
C)less than for the prior year due to the change in turnover.
D)less than for the prior year due to the change in margin.

Question

The following information was extracted from the accounting records of Florissant Valley Motors: $\begin{array}{lcc} 
& \text { Prior Year } & \text { Current Year } \
\text { Margin } & 6.0 & 5.0 \
\text { Tumover } & 2.5 & 3.2
\end{array}$ Florissant Valley's ROI for the current year is
A)greater than for the prior year due to the change in turnover.
B)greater than for the prior year due to the change in margin.
C)less than for the prior year due to the change in turnover.
D)less than for the prior year due to the change in margin.

Quizplus · Accepted Answer

ROI (Return on Investment) is calculated as Margin * Turnover. For the prior year, ROI = 6.0 * 2.5 = 15. For the current year, ROI = 5.0 * 3.2 = 16. Therefore, the ROI for the current year is greater than for the prior year, and this increase is attributed to the change in turnover, despite the decrease in margin.

The Following Information Was Extracted from the Accounting Records of Florissant