Which of the following could cause return on net operating assets to increase, all things other equal?

Question

Quizplus · Accepted Answer

Return on net operating assets is calculated as operating income divided by net operating assets. Increasing inventory turnover, which means selling inventory faster, would decrease the denominator of this ratio, effectively increasing the return on net operating assets. A decrease in interest rate on debt would decrease interest expense, but it would not directly affect operating income, so it would not affect the return on net operating assets. An increase in days accounts receivable are outstanding would increase the denominator, lowering the return on net operating assets. Decreasing gross margin would result in lower operating income, which would also decrease the return on net operating assets.

Which of the Following Could Cause Return on Net Operating