Which of the following is an appropriate computation for return on investment?
A) Net income divided by total assets
B) Net income divided by sales
C) Sales divided by total assets
D) Sales divided by stockholders' equity

Question

Quizplus · Accepted Answer

Return on investment is a measure of how effectively the company is using its assets to generate profits. Therefore, the appropriate computation for ROI would be net income divided by total assets. Option A is the only one that uses both net income and total assets in the calculation.

Which of the Following Is an Appropriate Computation for Return