Which of the Following Is the Correct Formula for Calculating

question 118

Multiple Choice

Which of the following is the correct formula for calculating return on investment?

• A) Net profit / Sales
• B) Gross profit / Sales
• C) Operating income / Average total assets
• D) Earnings available to stockholders / Number of outstanding shares of stock

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Definitions:

Well-functioning Market

A market where resources are allocated efficiently, information is freely available, transaction costs are low, and property rights are protected.

Nominal Interest Rate

The percentage increase in money that borrowers pay lenders, not adjusted for inflation.

Inflation

The pace at which prices for various goods and services climb, diminishing the value of money to buy them.

Storage Costs

Expenses associated with keeping goods stored in a warehouse or other facility until they are sold or used.