The Return on Investment Is Calculated By

question 50

Multiple Choice

The return on investment is calculated by:

• A)Multiplying the capital turnover by the return on sales.
• B)Dividing the capital turnover by the return on sales.
• C)Dividing average invested capital by sales.
• D)Multiplying operating income by capital turnover.

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Definitions:

Variable Costs

Costs that change in proportion to the level of production or activity, such as materials and labor.

Sales

The transactions involving the exchange of goods or services for money.

Contribution Margin Ratio

A financial metric that measures how much of a company's revenue is left over after variable costs to cover fixed costs and generate profit.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance premiums.