Question

All other things equal, which of the following events would generally cause an increase in a company's return on investment (ROI)?

A decrease in operating expenses.
An increase in operating expenses.
A decrease in sales.
An increase in average operating assets.

Answer 1

A decrease in operating expenses typically leads to an increase in a company's return on investment (ROI), as it raises net income relative to the investment. one point.

Step-by-step explanation:

When considering the return on investment (ROI), all other things held equal, a decrease in operating expenses would generally cause an increase in a company's ROI. ROI is calculated by dividing the net income by the investment or the assets used to generate that income. Lowering operating expenses while keeping sales constant increases net income, and thus, increases ROI. On the other hand, an increase in operating expenses, a decrease in sales, or an increase in average operating assets, assuming no change in sales, would generally decrease ROI.