Which of the following performance measures will increase if
Which of the following performance measures will increase if inventory decreases and all else remains the same or constant?
No
*That is all there is to the question
| Return on Investment | Residual Income | |
| A) | Yes | Yes |
| B) | No | Yes |
| C) | Yes | No |
| D) | No | No *That is all there is to the question |
Solution
Option A is the answer.
With the decrease in inventory, all others constant, the investment involved in business is lower than before. But able to generate same revenues. As a result there will be an increase in Return on Investment and Residual income
