All else being equal, which of the following items would increase a company's return on investment (ROI)?
A) A decrease in net income.
B) An increase in fixed costs.
C) A decrease in average operating assets.
D) A decrease in sales volume.

Question

Quizplus · Accepted Answer

Return on investment (ROI) is calculated by dividing net income by average operating assets. Therefore, decreasing average operating assets would increase ROI, all else being equal. Decreasing net income or sales volume would decrease ROI, and increasing fixed costs would decrease net income, all else being equal.

All Else Being Equal, Which of the Following Items Would