Final answer:
When liabilities and assets both increase by the same amount and Owners Equity remains unchanged, both ROI and the debt ratio stay the same since the proportional increase maintains the ratios.
Step-by-step explanation:
The subject of the question pertains to the impact on the Return on Investment (ROI) and the debt ratio when there is an increase in both liabilities and assets by $50,000 with Owners Equity (OE) remaining unchanged. ROI is a measure of the profitability of an investment relative to its cost, and the debt ratio is an indicator of financial leverage, showing the proportion of a company's assets that are financed through debt.
Given that both assets and liabilities increase by the same amount and OE does not change, the ROI should remain the same because the net income relative to total assets has not been altered by these transactions – assuming all else, including revenue and expenses, stays constant. Similarly, the debt ratio should also stay the same, assuming the additional liabilities have been utilized to purchase additional assets, and thus the proportion of the debt to total assets remains constant. Therefore, the correct answer is C. Stay the same; proportional increase maintains ratios.