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30 May, 10:51

Oliver Co. increased sales from $100,000 to $150,000 while controlling expense growth so that operating income increased from $30,000 to $35,000. Assuming investment in operating assets remains constant at $50,000, what is the effect on ROI?

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  1. 30 May, 10:57
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    Increased

    Explanation:

    The formula to compute the return on investment is shown below:

    Return on investment = Operating Income : Operating Assets

    In the first case, the ROI would be

    = $30,000 : $50,000

    = 60%

    In the second case, the ROI would be

    = $35,000 : $50,000

    = 70%

    The ROI is increased from 60% to 70%. It is always shown in percentage terms
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Home » Business » Oliver Co. increased sales from $100,000 to $150,000 while controlling expense growth so that operating income increased from $30,000 to $35,000. Assuming investment in operating assets remains constant at $50,000, what is the effect on ROI?
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