Return on investment can be decomposed into two ratios: investment turnover and return on sales.

Question

Quizplus · Accepted Answer

Return on investment (ROI) can indeed be decomposed into two components: investment turnover (which measures how efficiently a company uses its assets to generate sales) and return on sales (which measures how efficiently a company converts sales into profits). This decomposition helps in understanding the drivers behind a company's ROI.

Return on Investment Can Be Decomposed into Two Ratios: Investment