A company can potentially increase its return on investment (ROI) by Blank______. Multiple select question.investing in operating assetsreducing operating expensesborrowing additional fundsincreasing sales
Question
A company can potentially increase its return on investment (ROI) by Blank______. Multiple select question.investing in operating assetsreducing operating expensesborrowing additional fundsincreasing sales
Solution
A company can potentially increase its return on investment (ROI) by:
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Investing in operating assets: This can increase the company's productivity and efficiency, leading to higher profits and a higher ROI.
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Reducing operating expenses: By cutting unnecessary costs, the company can increase its net income, which in turn increases its ROI.
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Increasing sales: Higher sales mean higher revenue, which can lead to a higher ROI if costs are controlled.
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Borrowing additional funds: This can be a bit tricky. While borrowing can provide the company with more resources to invest and potentially increase profits, it also increases the company's liabilities. If the return on the borrowed funds is higher than the interest expense, it can increase the ROI. However, if the return is lower, it can decrease the ROI. Therefore, this option should be considered carefully.
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