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:

Optimizing Goal

Aimed at finding the best possible solution or outcome in a given situation, often in contrast to satisfying goals which seek a "good enough" result.

Satisficing

A decision-making strategy that involves choosing an option that meets a minimum level of satisfaction rather than optimizing the best possible outcome.

Profitable

Refers to the ability of a business or activity to generate more revenue than the expenses incurred, leading to financial gain.

Opportunity

A set of circumstances that makes it possible to do something or that creates a chance for progress or advancement.