CFA Practice Question

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CFA Practice Question

Which of the following is the formula for computing return on investment (ROI)?

A. Net income divided by sales
B. Net income divided by assets
C. Net income divided by equity
Correct Answer: B

The formula for computing return on investment is net income divided by assets.

User Contributed Comments 5

User Comment
achu Investment ROI is clearly distinct from Equity (ROE). Investment could mean more than just equity, only B is right "all the time." C would be right if you knew that all investments were equity but in general that's not true.
omf24 ROA is the same as ROI.
DS12 Think about how acquiring assets for the firm is an investing activity in the cash flow statement. Therefore the assets of the company are the company's "investment"
leon121 good 1 @DS12....mah man
Inaganti6 Got it wrong but great question....makes the $99 for this site feel so worth it.
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