Return on investment (ROI)for a firm:
A)is the margin of profit earned by the firm inclusive of the taxes payable by the firm.
B)is its total assets multiplied by the net profits after taxes.
C)measures management's overall effectiveness in generating profits with the available assets.
D)will be lower than the previous year if the firm performs better in the market.

Question

Return on investment (ROI)for a firm:
A)​is the margin of profit earned by the firm inclusive of the taxes payable by the firm.
B)is its total assets multiplied by the net profits after taxes.
C)measures management's overall effectiveness in generating profits with the available assets.
D)​will be lower than the previous year if the firm performs better in the market.

Quizplus · Accepted Answer

ROI measures how effectively a company generates profits with the assets it has available. It is calculated by dividing net profits by total assets. It is not affected by taxes payable or market performance and does not involve multiplying assets with net profits after taxes. Therefore, the best choice is C.

Return on Investment (ROI)for a Firm