If the operating asset turnover increased by 50 percent and the margin increased by 50 percent, the ROI would increase by
A)50 percent.
B)25 percent.
C)100 percent.
D)125 percent.

Question

Quizplus · Accepted Answer

ROI (Return on Investment) is calculated as the product of the operating asset turnover and the margin. If both the operating asset turnover and the margin increase by 50 percent, the new ROI would be 1.5 times the operating asset turnover multiplied by 1.5 times the margin, which equals 2.25 times the original ROI. This represents a 125 percent increase from the original ROI.

If the Operating Asset Turnover Increased by 50 Percent and the Margin