Question

14. A company that has a profit can increase its return on investment by: A. increasing sales revenue and operating expenses by the same dollar amount. B. increasing average operating assets and operating expenses by the same dollar amount. C. increasing sales revenue and operating expenses by the same percentage. D. decreasing average operating assets and sales by the same percentage.

Answer 1

C. Increasing sales revenue and operating expenses by the same dollar amount.

Step-by-step explanation:

ROI or return on Investment is the amount the which is received as a return on your capital invested. Hence the more the better for business.

For example,

The Sales revenue is $200 and the operating expenses are $100, so the net profit will be => 200-100 = $100.

Now if we increase the sales revenue and operating expenses by the same percentage let say 10%.

The NEW sales revenue will be = 200*1.1 = $220.

The NEW operating costs will be = 100*1.1 = $110.

Hence, the new profit will be = 220-110 = $110.

Therefore, increasing sales revenue and operating costs by the same percentage would increase ROI by $10.

Hope this helps.

Good Luck.

Answer 2

increasing sales revenue and operating expenses by the same percentage.

Step-by-step explanation:

Return of investment is defined as the profit that is gained on a certain amount of invested capital in a business.

A business ensures it has a high return on investments to satisfy customer need for profit. It is a ratio of net profit to invested capital.

This also boosts confidence to invest more.

To increase ROI a firm will need to increase profit and operating expense by the same percentage.

For example if profit in a business is $100 and operating expense is $80, the net profit will be $20

However if we increase both sales revenue and operating expense by 10%, we will have profit of $110 and a operating expense of $88. The net profit will now be $22 resulting in a higher ROI.