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Return on investment (ROI)

ABC Corporation has sales of $1,000,000, gross profit of $550,000, net income of $150,000, average total operating assets of $1,500,000 and fixed assets of $450,000. What is ABC's return on investment (ROI)? (Points: 1)
15%
10%
55%
45%

Holding all other factors equal, if net income increases, what will be the effect on return on investment (ROI)?
It will increase proportionately.
It will decrease proportionately.
It will remain the same.
ROI will increase at twice the rate of the increase in net income.

Holding all other factors equal, if average total operating assets are increased, what will be the effect on return on investment (ROI)?
It will increase proportionately.
It will decrease proportionately.
It will remain the same.
ROI will increase at twice the rate of the increase in average total assets.

Holding all other factors equal, if asset turnover is increased from 0.8 to 0.9, what will be the effect on return on investment (ROI)?
It will increase proportionately.
It will decrease proportionately.
It will remain the same.
ROI will increase by 10%.

The "Balanced Scorecard" approach summarizes performance criteria into four categories. Which of the following is NOT one of the criteria?
Customer satisfaction
Current market price of the company's common stock
Internal business
Innovation and learning

Fully absorbed transfer pricing would be based on which of the following?
Both fixed and variable costs of production
Fixed portion of production costs only
Variable portion of production costs only
None of the above

When should opportunity cost be used in determining transfer pricing?
Only when no idle capacity exists.
Only when idle capacity exists.
At all times.
Opportunity cost should not be used in determining transfer pricing at any time.

Solution Preview

BC Corporation has sales of $1,000,000, gross profit of $550,000, net income of $150,000, average total operating assets of $1,500,000 and fixed assets of $450,000. What is ABC's return on investment (ROI)? (Points: 1)
15%
10%
55%
45

=Net Income/Average Total operating Assets
=150000/1500000
=10%=Answer

Holding all other factors equal, if net income increases, what will be the effect on return on investment (ROI)?
...

Solution Summary

Response discusses the steps to compute the return on investment (ROI)

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