Which of the Following Statements About ROI Is False

question 90

Multiple Choice

Which of the following statements about ROI is false?

• A) ROI is used to measure the performance of investment centers.
• B) ROI = margin divided by investment turnover.
• C) Trying to maximize ROI can result in a conflict between the interest of a particular manager and the interest of the business as a whole.
• D) The book value of operating assets is frequently used as the investment base for calculating return on investment.

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Definitions:

Capital Interest

The portion of an investment or equity that represents the initial sum invested or the value contributed by an investor or partner.

Capital Account

A financial record that shows the changes in business ownership over a period. It includes capital contributions and withdrawals by owners.

Partner Capital Accounts

Accounts reflecting the individual investments of partners in a partnership, including their share of profits, losses, and any withdrawals.

Capital Additions

Investments or expenditures made to acquire or improve long-term assets, enhancing the asset value or extending its useful life.