If a company desires to increase ROI, it should consider methods that will decrease

Question

Quizplus · Accepted Answer

ROI or Return on Investment is calculated by dividing the operating income by average operating assets. Therefore, to increase ROI, a company can consider methods that will decrease average operating assets. This can be achieved by reducing inventory levels or selling off unproductive assets. Decreasing sales revenue or segment margin may negatively impact ROI, and increasing asset turnover may not necessarily increase ROI if it is not accompanied by an increase in operating income.

If a Company Desires to Increase ROI, It Should Consider