The return on investment is computed as
A)operating income divided by sales.
B)operating income divided by average operating assets.
C)sales divided by average operating assets.
D)operating asset turnover divided by the operating income margin.

Question

Quizplus · Accepted Answer

The return on investment is computed as operating income divided by average operating assets. This ratio measures how efficiently a company is using its assets to generate profits. Choice A is the operating income margin, which measures the profitability of each dollar of sales. Choice C is the asset turnover ratio, which measures how efficiently a company is using its assets to generate sales. Choice D is a combination of these two ratios, which does not provide a direct calculation of the return on investment.

The Return on Investment Is Computed as