A Firm's Profit Objective Is Often Measured in Terms of ROI

question 197

Multiple Choice

A firm's profit objective is often measured in terms of ROI. The acronym ROI stands for

• A) risk opportunity investment.
• B) revised organizational incentives.
• C) return on investment.
• D) regulated organizational investments.
• E) replenishment of organizational inventories.

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Definitions:

Activity Base

A measure used for allocating fixed costs to products or services based on the amount of activity.

Service Departments

Units within an organization that provide support to the profit-making departments, rather than directly contributing to profits.

Profit Margin

represents the percentage of revenue that remains as profit after all operating expenses, taxes, and costs have been deducted from total sales.

Investment Turnover

A ratio that measures how effectively a company generates sales or revenue from its investment in assets.