When Defining Net Operating Income for Return on Investment (ROI)

question 28

Multiple Choice

When defining net operating income for return on investment (ROI) purposes, which of the following items should not be included?

• A) Sales revenue
• B) Cost of goods sold
• C) Interest expense
• D) Salaries expense

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Definitions:

Book Value

The net value of a company's assets minus its liabilities and intangible assets, often used to estimate a company's worth in liquidation scenarios.

Total Asset Turnover

A financial ratio that measures a company's efficiency in using its assets to generate sales or revenue, calculated as sales divided by total assets.

Net Sales

The sum of sales income remaining after subtracting the value of returns, allowances for damaged or missing items, and discounts.

Acquired Assets

Assets obtained through purchase or merger, typically contributing to the owner's financial position.