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

question 142

Multiple Choice

What will happen to return on investment (ROI) if current assets decrease while everything else remains the same (assume the current assets decreased is part of operating current assets) ?

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

Analyze the factors involved in capital budgeting decisions such as cash flows, time value of money, and hurdle rate.

Calculate and interpret the results of different capital budgeting techniques.

Evaluate the advantages and disadvantages of various capital budgeting methods.

Understand the role of risk and uncertainty in capital budgeting decisions.

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Definitions:

Price Elastic

Pertains to a measurement in economics of how responsive an economic variable's quantity is to a change in its price.

Total Budget

The complete amount of money allocated for a particular purpose, project, organization, or time period.

Cross Elasticity

Cross elasticity measures the responsiveness of the demand for one good to a change in the price of another good, indicating their substitutability or complementarity to consumers.

Complementary Goods

Products or services that are used together, where the increase in demand for one leads to an increase in demand for the other.