The correct answer is: C. Both A and B
A low Return on Investment Ratio (ROI) indicates that a company is not making as much money as it could be from its investments. This could be due to improper utilization of resources, such as not using the right tools or not having the right people in place. It could also be due to over investment in assets, such as buying too much equipment or inventory.
To improve ROI, companies need to identify and address the root causes of the problem. This may involve making changes to the way they operate, investing in new technologies, or selling off assets.
Here is a brief explanation of each option:
- A. Improper utilization of resources
This could mean that a company is not using its resources efficiently. For example, it may be using outdated equipment or not having the right people in place. This can lead to wasted time and money, which can lower ROI.
- B. Over investment in assets
This could mean that a company is buying too much equipment or inventory. This can tie up cash and lead to depreciation costs, which can lower ROI.
- C. Both A and B
It is possible that a company is experiencing both improper utilization of resources and over investment in assets. This can be a major problem, as it can lead to significant losses.
- D. None of the above
It is also possible that a low ROI is due to factors other than improper utilization of resources or over investment in assets. For example, it could be due to a decline in sales or an increase in costs.