Reference: 12-06
the Baily Division Recorded Operating Data as Follows

question 20

Multiple Choice

Reference: 12-06
The Baily Division recorded operating data as follows for the past two years: $$\begin{array} { | l | l | l | } \hline & \text { Year 1 } & \text { Year 2 } \\\hline \text { Sales } & ? & \$ 1,200,000 \\\hline \text { Stockholders' equity } & \$ 540,000 & 720,000 \\\hline \text { Average operating assets } & \$ 600,000 & ? \\\hline \text { Margin } & 15 \% & ? \\\hline \text { Return on investment } & 22.5 \% & 18 \% \\\hline\end{array}$$ Baily Division's turnover was exactly the same in both Year 1 and Year 2.
-Assuming that sales and average operating assets remain the same, a company's return on investment will:

• A)decrease if margin increases.
• B)increase if net operating income increases.
• C)decrease if net operating income decreases.
• D)increase if margin decreases.

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Definitions:

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