Why is return on investment (ROI) the most commonly used financial performance measure?
A)It measures how far profits can decline before managers cannot meet interest changes.
B)It measures how efficiently managers are collecting revenues from customers to pay expenses.
C)It shows whether organizations can pay claims of short-term creditors without selling inventory.
D)It measures how efficiently managers are turning inventory over.
E)It allows managers of one organization to compare performance with that of other organizations.

Question

Quizplus · Accepted Answer

Return on investment (ROI), an organization's net income before taxes divided by its total assets, is the most commonly used financial performance measure because it allows managers of one organization to compare performance with that of other organizations.

Why Is Return on Investment (ROI) the Most Commonly Used