Operating income alone does not indicate how efficiently a segment is using its assets.

Question

Quizplus · Accepted Answer

Operating income does not take into account the amount of assets that were required to generate that income. Therefore, looking solely at operating income does not provide insight into how efficiently a segment is using its assets. Other financial metrics such as return on assets (ROA) or return on investment (ROI) should also be considered.

Operating Income Alone Does Not Indicate How Efficiently a Segment