GreenWorld Company wants to increase its ROI from 20 per cent to 25 per cent in the current year. They cannot increase operating income and sales from the previous year's levels of £50,000 and £1,200,000, respectively. To increase ROI, GreenWorld should

Question

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ROI is calculated by dividing operating income by total assets. In order to increase ROI while keeping operating income constant, GreenWorld needs to decrease its total assets. One way to do that is by selling off obsolete inventory and using the proceeds to pay off debts. Option C of selling inventory for £50,000 would provide more funds to pay off debts compared to option B which sells inventory for only £10,000. Option A of making additional investments goes against the goal of decreasing assets, and therefore, isn't the best choice. Lastly, option D is incorrect as there are ways to increase ROI without increasing sales or operating income, such as decreasing expenses or assets.

GreenWorld Company Wants to Increase Its ROI from 20 Per