What Will Happen to Return on Investment (ROI)if Current Assets

question 73

Multiple Choice

What will happen to return on investment (ROI) if current assets decrease while everything else remains the same?

• A)ROI will decrease.
• B)ROI will increase.
• C)ROI will not be affected.
• D)We cannot determine the direction of the effect from the information provided.

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Definitions:

Revenue

Income generated from normal business operations and includes discounts and deductions for returned merchandise.

Accounts Payable

Liabilities of a business that represent amounts owed to creditors for goods and services received but not yet paid for.

Credit Entries

Entries made on the right side of an account in double-entry bookkeeping, indicating an increase in liabilities, revenue, or equity, or a decrease in assets.

Revenues

The total income generated by a company from its normal business activities, often from the sale of goods and services to customers.