The return on investment (ROI)ratio measures
A)only asset turnover.
B)only earnings as a percent of sales.
C)both asset turnover and earnings as a percent of sales.
D)asset turnover and earnings as a percent of sales,correcting for the effects of differing depreciation methods.

Question

Quizplus · Accepted Answer

The ROI ratio measures both asset turnover and earnings as a percent of sales. It is calculated by dividing net income by total assets, which takes into account how efficiently a company is using its assets to generate earnings. Additionally, the ratio can be improved either by increasing sales or by reducing the cost of goods sold, which can also help increase earnings.

The Return on Investment (ROI)ratio Measures