If the Operating Asset Turnover Ratio Increased by 40 Percent

question 96

Multiple Choice

If the operating asset turnover ratio increased by 40 percent and the margin increased by 30 percent, the divisional ROI

• A)would decrease by 70 percent.
• B)would increase by 82 percent.
• C)would increase by 30 percent.
• D)cannot be determined.

---

Definitions:

Useful Life

The estimated period over which a tangible or intangible asset is expected to be functional and economic for its intended purpose.

Office Building

A structure designed for administrative or professional activities, often housing offices for various businesses or services.

Accrual-Basis Accounting

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.

Financial Statements

Reports that summarize the financial activities of a business, including the balance sheet, income statement, and cash flow statement.