If a Division Is Evaluated Using Return on Investment (ROI)without

question 47

Multiple Choice

If a division is evaluated using return on investment (ROI) without regard to how assets are financed,the denominator in the ROI calculation will be:

• A)current assets.
• B)working capital.
• C)total assets available.
• D)total assets employeD.

---

Definitions:

Inventory Method

An accounting approach used to value and manage the inventory a business holds, affecting cost of goods sold and ending inventory.

Accounts Payable Turnover Ratio

A financial efficiency ratio that measures how many times a company pays off its suppliers during a specific period.

Interest Expense

The cost incurred by an entity for borrowed funds, shown as an expense on the income statement.

Interest Payable

A liability account representing the amount of interest expense that has been incurred but not yet paid by the company.