alleryStart learning →Return on investment is a segment's profit or loss divided by the:
AInvestment banker
BInstalment basket
CInstrument basics
DInvestment base
Answer & Solution
Correct answer: D. Investment base
1. Return on investment compares a result against what was tied up to get it.
2. The numerator is the profit or loss of the segment.
3. The denominator is the investment base.
4. So ROI is net income over that base.
_Source: OpenStax Principles of Accounting Volume 2, Managerial Accounting (CC BY-NC-SA 4.0), Ch 9 'Responsibility Accounting and Decentralization', sections 9.1-9.4_
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