Which of the Following Is an Appropriate Computation for Return

question 23

Multiple Choice

Which of the following is an appropriate computation for return on investment?

• A) Net income divided by sales
• B) Net income divided by total assets
• C) Sales divided by total assets
• D) Sales divided by stockholders' equity

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Definitions:

Net Operating Income

The profit generated from a company's regular business operations, excluding expenses from interest and taxes.

Variable Costing

A costing method that includes only variable costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.

Segmented Income Statements

Financial reports that show income, expenses, and profitability for different parts of an organization, such as departments or products.

Common Fixed Costs

Costs that remain unchanged in total for a given time period, despite variations in activity level.