A Firm Earning a Profit Can Increase Its Return on Investment

question 125

Multiple Choice

A firm earning a profit can increase its return on investment by: (CMA adapted)

• A) increasing sales revenue and operating expenses by the same dollar amount.
• B) decreasing sales revenues and operating expenses by the same percentage.
• C) increasing investment and operating expenses by the same dollar amount.
• D) increasing sales revenues and operating expenses by the same percentage.

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Definitions:

Aging

A method used to categorize accounts receivable based on the length of time an invoice has been outstanding.

Accounts Receivable

Unpaid customer debts to a company for goods or services that have been supplied.

Bad Debts Expense

An expense reported on the income statement reflecting the cost of estimated uncollectible accounts receivable.

Net Credit Sales

Sales made on credit minus any sales returns or allowances, reflecting the actual credit sales revenue.