Return on Investment (ROI) Is a Widely Used Financial Metric

question 46

Multiple Choice

Return on investment (ROI) is a widely used financial metric but suffers from the following weakness:

• A) it includes variable costs and excludes fixed costs
• B) it omits certain financial measures including sales returns
• C) intangible benefits such as innovation are not captured in ROI
• D) revenues, expenses and assets are difficult to calculate making ROI subject to error
• E) none of the above

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Definitions:

Land Improvements

Enhancements made to land such as landscaping, fencing, and lighting that increase the property's value.

Outdoor Lighting

Lighting specifically designed for exterior spaces, such as streets, parks, and residential landscapes to enhance visibility and aesthetics.

New Business Location

The process or event of opening or moving a business to a new geographical area or premises.

Other Income/Expense

Non-operational revenue or costs that are not related to the primary activities of a business, such as gains or losses from investments.