Any increase in profit contribution that a strategy generates, without increasing capital invested,
A) is an impossible task.
B) increases the firm's return on investment.
C) reduces shareholder value.
D) increases the debt to equity ratio.
E) increases the risk associated with that strategy.

Question

Quizplus · Accepted Answer

Profit contribution is the amount of revenue that contributes to the profit of a business after all expenses have been subtracted. If a strategy increases profit contribution without increasing capital invested, this means that the firm's return on investment (ROI) has increased. ROI is a measure of profitability that calculates the percentage return on capital invested. Therefore, any increase in profit contribution would increase the firm's ROI.

Any Increase in Profit Contribution That a Strategy Generates, Without