Return on Investment (ROI)is equal to the
A)(Profit Margin/Division Costs)´ (Division Costs/Division Investment).
B)(Profit Margin/Division Revenues)´ (Division Revenues/Division Investment).
C)(Sales Margin/Division Revenues)´ (Division Revenues/Division Investment).
D)(Sales Margin/Division Costs)´ (Division Costs/Division Investment).

Question

Quizplus · Accepted Answer

ROI is a measure of profitability and efficiency, calculated as the net profit divided by the investment. In this case, the net profit is the profit margin, which is the profit divided by revenue. Therefore, (Profit Margin/Division Revenues) represents the profitability of the division. The investment is represented by the Division Investment. Therefore, (Division Revenues/Division Investment) represents the efficiency of the division. Multiplying these two together gives us the ROI. Option B incorporates these two components in a correct manner.

Return on Investment (ROI)is Equal to the