The formula for calculating ROI is
A)segment margin divided by the internal rate of return.
B)internal rate of return divided by average operating assets.
C)operating income divided by average operating assets.
D)segment margin divided by assets minus liabilities.

Question

Quizplus · Accepted Answer

The formula for calculating ROI (Return on Investment) is operating income divided by average operating assets. This measures how effectively a company uses its assets to generate profit. Option A is incorrect because it combines segment margin and internal rate of return, which are two separate metrics. Option B is also incorrect because it divides the internal rate of return by assets, which doesn't provide an accurate measure of effectiveness. Option D is incorrect because it subtracts liabilities from assets, which doesn't account for the financing of the assets.

The Formula for Calculating ROI Is