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**CFA Practice Question**

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

B. Net income divided by assets

C. Net income divided by equity

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.

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**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. |