The rate of return on investment may be computed by multiplying investment turnover by the profit margin.

Question

Quizplus · Accepted Answer

The rate of return on investment (ROI) formula is: ROI = (Net Profit / Total Investment) x 100. Net profit can be calculated as Profit Margin x Sales Revenue. Investment turnover is calculated as Sales Revenue / Total Investment. Therefore, ROI can also be calculated as (Profit Margin x Sales Revenue / Total Investment) x 100, which shows that investment turnover and profit margin are important components in determining ROI.

The Rate of Return on Investment May Be Computed by Multiplying