An advantage of the ROI formula is that it forces the manager to control the investment in operating assets as well as net operating income

Question

Quizplus · Accepted Answer

The ROI formula takes into account both net operating income and the investment in operating assets. Therefore, changes in sales, expenses, and assets can all impact an organization's ROI. For example, an increase in sales will typically increase net operating income and therefore increase ROI. Conversely, an increase in expenses or assets will decrease net operating income and potentially decrease ROI. By tracking and analyzing these factors, managers can work to improve their organization's ROI.

An Advantage of the ROI Formula Is That It Forces