Which of the following statements about return on investment (ROI)is false?
A) ROI equals margin divided by investment turnover.
B) ROI is used to measure the performance of investment centers.
C) Seeking to maximize ROI can result in a conflict between the interest of a particular manager and the interest of the business as a whole.
D) Companies may minimize motivational problems by using original cost instead of book value in the denominator of the ROI formula.

Question

Quizplus · Accepted Answer

ROI is calculated as the net income generated by an investment divided by the cost of the investment, not as margin divided by investment turnover.

Which of the Following Statements About Return on Investment (ROI)is