What will happen to return on investment (ROI) if selling and administrative expenses decrease while everything else remains the same?
A) ROI will increase.
B) ROI will decrease.
C) ROI will not be affected.
D) We cannot determine the effect from the information provided.

Question

Quizplus · Accepted Answer

While everything else remains the same, a decrease in selling and administrative expenses will result in an increase in net income. As ROI is calculated by dividing net income by the investment, a higher net income will increase ROI. Therefore, ROI will increase if selling and administrative expenses decrease while everything else remains the same.

What Will Happen to Return on Investment (ROI) If Selling