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Unreliable Corp reported the following data for last year's operations: Net operating income................ $30,000 Sales... $500,000 Average assets $200,000 . Last year's Return on Investment
Unreliable Corp reported the following data for last year's operations: Net operating income................ $30,000 Sales... $500,000 Average assets $200,000 . Last year's Return on Investment was 15%. To increase ROI, at least one of the following must occur: Increase sales. Assume that Unreliable Corp is able to increase sales to $600,000 and net operating income increases to $42,000. Also assume that average assets are not affected. Reduce expenses. Assume that Unreliable Corp is able to reduce expenses by $10,000 per year. Also assume that sales and average assets are not affected Required: What is the best choice for Unreliable Corp to make? Why
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