What will happen to return on investment (ROI) if a company must decrease its selling price while all of the company's expenses remain constant?
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

If the selling price decreases while all expenses remain constant, the profit margin will decrease, which will ultimately result in a decrease in ROI. Lower profit margins mean that the company is earning less on every dollar of sales, which reduces the overall return on investment.

What Will Happen to Return on Investment (ROI) If a Company