The rate of return generated by an investment center's assets is called:
A) residual income.
B) economic value added.
C) return on investment.
D) segment margin ratio.

Question

Quizplus · Accepted Answer

Return on investment (ROI) measures the rate of return generated by an investment center's assets. Residual income and economic value added are also measures of performance, but they are based on a different calculation that considers the cost of capital. The segment margin ratio is a measure of profitability for a specific segment and does not reflect the return on investment for the entire investment center.

The Rate of Return Generated by an Investment Center's Assets