Return on investment (ROI)is a very popular measure employed to evaluate the performance of corporate segments because it incorporates all of the major ingredients of profitability (revenue,cost,investment)into a single measure.Under which one of the following combinations of actions regarding a segment's revenues,costs,and investment would a segment's ROI always increase? (CIA adapted)
A)Option A
B)Option B
C)Option C
D)Option D

Question

Return on investment (ROI)is a very popular measure employed to evaluate the performance of corporate segments because it incorporates all of the major ingredients of profitability (revenue,cost,investment)into a single measure.Under which one of the following combinations of actions regarding a segment's revenues,costs,and investment would a segment's ROI always increase? (CIA adapted) 
A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

Option D shows an increase in revenue, a decrease in costs and a decrease in investment. Since ROI is calculated by dividing profit (revenue - cost) by the investment, decreasing both the denominator (investment) and the numerator (cost) while increasing the numerator (revenue) will result in an overall increase in ROI. Therefore, Option D is the correct choice.

Return on Investment (ROI)is a Very Popular Measure Employed to Evaluate