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

income/investment = income/revenues x revenues/investment

1. What advantages are there in the breakdown of the computation into two separate components?

2. Fill in the blanks for the following table:

	Companies in Same Industry
	A	B	C
Revenues	$500,000	$200,000	?
Income	$150,000	$60,000	?
Investment	$250,000	?	$1,000,000
Income as a percentage of revenues	?	?	3.0%
Investment turnover	?	?	2
ROI	?	6%	?

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.

b.

c.

d.

The breakdown stresses the possibility of trading off investment turnover for income as a percentage of revenues. The breakdown stresses the possibility of trading off investment turnover for total assets as a percentage of investment. The importance of investment turnover as a key to income is stressed. The importance of required rate of return as a key to income is stressed. The importance of revenues is explicitly recognized. The importance of total assets is explicitly recognized. The important components are expressed as dollar figures instead of ratios or percentages. The important components are expressed as ratios or percentages instead of dollar figures. Question 3 c