The formula for calculating ROI is

Question

Quizplus · Accepted Answer

ROI (return on investment) is calculated by dividing operating income (also known as earnings before interest and taxes or EBIT) by average operating assets. This measures the efficiency of a company's use of its resources in generating profits. Choice A is incorrect because net income includes non-operating items such as interest and taxes, which do not directly relate to the use of assets. Choice B is incorrect because segment margin only measures the profitability of a specific business unit or product line, and does not take into account the amount of assets used to generate that profit. Choice D is incorrect because assets minus liabilities does not provide a measure of how effectively those assets are being used to generate profit.

The Formula for Calculating ROI Is