Calculating return on investment for an investment center is defined by the following formula:
A)Contribution margin/Ending assets.
B)Gross profit/Ending assets.
C)Net income/Ending assets.
D)Income/Average invested assets.
E)Contribution margin/Average invested assets.

Question

Quizplus · Accepted Answer

ROI is calculated as income divided by average invested assets, as it provides a measure of profitability relative to the amount of capital invested in the investment center. This can help management determine whether the center is generating sufficient returns to justify the amount of capital invested.

Calculating Return on Investment for an Investment Center Is Defined