If a Company Wants to Increase Its Return on Assets

question 86

Multiple Choice

If a company wants to increase its return on assets, it should not

• A)increase the profit margin.
• B)increase the asset turnover.
• C)decrease average total assets.
• D)increase average total assets.

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Definitions:

ROI

Return on Investment; a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of multiple investments.

Combined Turnover

The sum total of sales or revenues generated by different segments, departments, or subsidiaries of a company within a specified period.

Investment Opportunity

An option available to individuals or companies to invest capital with the expectation of generating a return.

Residual Income

The profit earned after deducting the cost of capital from the net operating income.