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Return on investment (ROI) is often expressed as follows: Income / investment = Income / Revenues Revenues / Investment Requirement 1. What advantages are there

Return on investment (ROI) is often expressed as follows:

Income / investment = Income / Revenues Revenues / Investment

Requirement 1. What advantages are there in the breakdown of the computation into two separate components? Select from the options below. (Complete all input fields.)

a.

The importance of investment turnover as a key to income is stressed.

b.

The importance of revenues is explicitly recognized.

c.

The important components are expressed as ratios or percentages instead of dollar figures.

d.

The breakdown stresses the possibility of trading off investment turnover for income as a percentage of revenues.

Requirement 2. Fill in the blanks for the following table: (Enter investment turnover to the nearest tenth, X.X.)

Companies in Same Industry

Company A

Company B

Company C

Revenues

$1, 600,000

$1, 300,000

$?

Income

$96,000

$78,000

$?

Investment

$800,000

$?

$260,000

Income as a percentage of revenues

?

%

?

%

1.5

%

Investment turnover

?

?

2

ROI

?

%

3

%

?

%

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