Select all that applyWhich statements correctly describe return on investment (ROI)? (Choose every correct answer.)Multiple select question.It is sometimes referred to as return on assets (ROA).It is normally calculated using net income as the measure of the return.It is normally calculated using average total assets as the measure of the investment.It is calculated by dividing the average net income by the average total assets.It is calculated by dividing net income earned during the year by the total assets at the end of the year.
Question
Select all that applyWhich statements correctly describe return on investment (ROI)? (Choose every correct answer.)Multiple select question.It is sometimes referred to as return on assets (ROA).It is normally calculated using net income as the measure of the return.It is normally calculated using average total assets as the measure of the investment.It is calculated by dividing the average net income by the average total assets.It is calculated by dividing net income earned during the year by the total assets at the end of the year.
Solution
The correct statements that describe return on investment (ROI) are:
- It is normally calculated using net income as the measure of the return.
- It is normally calculated using average total assets as the measure of the investment.
- It is calculated by dividing the average net income by the average total assets.
The statement "It is sometimes referred to as return on assets (ROA)" is incorrect because ROI and ROA are two different financial metrics. ROI measures the efficiency of an investment and ROA measures how efficiently a company can manage its assets to produce profits during a period.
The statement "It is calculated by dividing net income earned during the year by the total assets at the end of the year" is also incorrect because ROI is calculated by dividing the net income by the initial investment, not the total assets at the end of the year.
Similar Questions
Return on investment (ROI) is commonly expressed in each of the following ways, except Blank______.Multiple choice question.ROI = Net income / ((Beginning of year total assets + end of year total assets) / 2)ROI = Operating income / Average operating assetsROI = Net income / Average total assetsROI = Net income / Average stockholders' equity
Return on investment (ROI) Blank______.Multiple choice question.is calculated by dividing the average net income for two years by the average total assetsis normally calculated using net income as the measure of the returnis sometimes referred to as return on equity (ROE)is calculated by dividing net income earned during the year by the total assets at the end of the year
Select all that applyCommon expressions of return on investment (ROI) calculation include which of the following? (Choose every correct answer.)Multiple select question.Net income / Average total assetsOperating income / Average total assetsNet income / Average operating assetsOperating income / Average operating assets
Return on investment (ROI) is a measure of:a.Profitabilityb.Efficiencyc.Liquidity
Return on investment = Blank______.Multiple choice question.Average operating assets ÷ Net operating incomeSegment revenue ÷ Net operating incomeNet operating income ÷ Average operating assetsNet operating income ÷ Segment revenue
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