Question

Divisional operating income ÷ assets of the business unit =

Option 1:
A. Return on Investment (ROI)

Option 2:
B. Asset Turnover Ratio

Option 3:
C. Return on Sales (ROS)

Option 4:
D. Operating Profit Margin

Answer 1

The divisional operating income divided by the assets of the business unit is called the Return on Investment (ROI). This ratio is a measure of the efficiency of a business in generating profits from its assets.

Step-by-step explanation:

When assessing the performance of a business unit, one commonly used financial ratio is the Return on Investment (ROI). It is calculated by dividing the divisional operating income by the assets of the business unit. This ratio represents the efficiency with which a business can convert its investment in assets into profits and gives managers and investors an idea of how well the company's capital is being used to generate profits.

To put it simply, the answer to the provided question is: Divisional operating income ÷ assets of the business unit = Return on Investment (ROI).