If the Operating Asset Turnover Ratio Increased by 30% and the Margin

question 118

Multiple Choice

If the operating asset turnover ratio increased by 30% and the margin increased by 20%, the divisional ROI

• A) would increase by 56%.
• B) would decrease by 60%.
• C) would increase by 20%.
• D) cannot be determined.

---

Definitions:

Financing Activities

Transactions and events that affect a company's long-term liabilities and equity, such as issuing debt or equity, repaying loans, and paying dividends.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, not relating directly to the entity's usual line of business.

Noncash Investing

Involves transactions that do not directly involve cash but affect the investing activities of a company; for example, acquiring assets through a trade or a note.

Financing Activity

Transactions related to a company’s financing efforts, including issuing debt, obtaining loans, or issuing shares of stock.