A firm earning a profit can increase its return on investment by: (CMA adapted)
A) increasing sales revenue and operating expenses by the same dollar amount.
B) decreasing sales revenues and operating expenses by the same percentage.
C) increasing investment and operating expenses by the same dollar amount.
D) increasing sales revenues and operating expenses by the same percentage.

Question

Quizplus · Accepted Answer

Increasing sales revenues and operating expenses by the same percentage will increase the return on investment because the increase in sales revenue will typically outpace the increase in operating expenses, leading to higher profits relative to the investment.

A Firm Earning a Profit Can Increase Its Return on Investment