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Which of the following measures the profitability of a division relative to the size of its investment in capital assets?

a) Return on investment (ROI)
b) Residual income
c) Economic value added (EVA)
d) Return on assets (ROA)

1 Answer

1 vote

Final answer:

The Return on Investment (ROI) measures the profitability of a division relative to the size of its capital assets investment, by dividing the net profit by the cost of capital assets invested.

Step-by-step explanation:

The measure that evaluates the profitability of a division relative to the size of its investment in capital assets is a) Return on investment (ROI). ROI is a key performance metric used to assess the efficiency of an investment or to compare the efficiency of several different investments. It is calculated by dividing the net profit of the division by the cost of the capital assets invested in the division. This ratio provides insight into how well a division is generating profits from the investments made into capital assets.

answered
User Tony Gibbs
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