The following information pertains to Bala Co.for the year ended December 31: (CPA adapted) Which of the following equations should be used to compute Bala's return on investment (ROI)?
A)(4/6)$\times$ (6/1)= ROI
B)(6/4)$\times$ (1/6)= ROI
C)(4/6)$\times$ (1/6)= ROI
D)(6/4)$\times$ (6/1)= ROI

Question

Quizplus · Accepted Answer

Return on Investment (ROI) is calculated as Net Income divided by Investment. The equation (6/4) represents Net Income over Investment, and (1/6) represents the inverse of the Investment Turnover, which when multiplied gives ROI.

The Following Information Pertains to Bala Co ×\times× (6/1)= ROI B)(6/4) ×\times×

The Following Information Pertains to Bala Co $\times$ (6/1)= ROI
B)(6/4) $\times$