Calculate the Return on Investment (ROI)from the Information Given Below

question 106

Multiple Choice

Calculate the return on investment (ROI) from the information given below. Net Income = $18,000; Advertising Expenses = $220,000; Total Liabilities = $120,000; Total Assets = $160,000; Gross Margin = $80,000; Taxes Paid = $2,000

• A) 16.67 percent
• B) 15 percent
• C) 11.25 percent
• D) 12.5 percent
• E) 50 percent

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Definitions:

Cash

Liquid assets held by a company, used to settle debts, purchase goods and services, or meet immediate needs; a fundamental indicator of financial health.

Debt Ratio

A financial ratio that measures the proportion of a company's total debt to its total assets, indicating the company's leverage.

Liabilities

Financial obligations or debts owed by a business to external parties or individuals, which must be settled over time through the transfer of economic benefits.

Equity

The ownership interest in a company of its shareholders; it represents the amount of assets that would be returned to shareholders if all the company's debts were paid off.