Return on investment can be broken into two components:
A)profit margin and asset turnover.
B)contribution margin and asset turnover.
C)segment margin and asset turnover.
D)profit margin and inventory turnover.

Question

Quizplus · Accepted Answer

Return on investment (ROI) is calculated by dividing net profit by total assets. Net profit can be broken down into profit margin (net profit/sales) and asset turnover (sales/total assets). Therefore, ROI can be broken down into profit margin and asset turnover. Choices B, C, and D are not correct because they include contribution margin, segment margin, and inventory turnover, respectively, which are not components of ROI.

Return on Investment Can Be Broken into Two Components