If the investment turnover ratio increased by 30% and the profit margin percentage increased by 20%,what would happen to the divisional ROI?
A)It would increase by 56%.
B)It would decrease by 60%.
C)It would increase by 20%.
D)The answer cannot be determined.

Question

Quizplus · Accepted Answer

The divisional ROI is calculated as the product of the investment turnover ratio and the profit margin percentage. If the investment turnover ratio increases by 30% and the profit margin percentage increases by 20%, the overall increase in ROI would be (1.3 * 1.2) - 1 = 0.56 or 56%.

If the Investment Turnover Ratio Increased by 30% and the Profit