If managers want to increase ROI, an increase in sales revenue will increase

Question

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Margin is the profit margin, which is calculated as (Revenue - Cost of Goods Sold)/Revenue. Increasing sales revenue will increase the numerator of this equation and therefore increase the profit margin. Asset turnover is the measure of how efficiently a company uses its assets to generate revenue, calculated as Revenue/Total Assets. Increasing sales revenue will increase the numerator of this equation and therefore increase asset turnover. Therefore, an increase in sales revenue will increase both margin and asset turnover, leading to an increase in ROI. Total assets, on the other hand, are not directly affected by an increase in sales revenue.

If Managers Want to Increase ROI, an Increase in Sales