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Division Q's current turnover is 12.0 and its return on sales ratio is 1.2. The division is considering a sales promotion that would increase its
Division Q's current turnover is 12.0 and its return on sales ratio is 1.2. The division is considering a sales promotion that would increase its current return on sales ratio by 10%, but decrease its turnover by 10%.
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(a) | If the division undertakes this promotion, by what percentage would the return on investment increase or decrease? |
(b) | If the division undertakes this promotion, by what percentage will the return on sales ratio need to increase in order for the return on investment to increase by 5%? |
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