Select the correct options related to Return on Investment (ROI)
A. $ROI=\frac{Net\, Income}{Equity}×100$
B. It indicates how own money is being used.
C. It will include not only what the investor spent out of his/her pocket, but also the borrowed funds
D. It equals the net income from a business divided by the total money invested in the venture multiplied by 100
E. $ROI=\frac{Net\,profit}{Total\,capital\,invested}×100$
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
Return on investment equals the net income from a business or a project divided by the total money invested in the venture multiplied by 100 (D). When calculating ROI, the investment will include not only what the investor spent out of his/her pocket, but also all borrowed funds. (C)
$ROI=\frac{Net\,profit}{Total\,capital\,invested}×100$ (E)
ROI shows how own money and the borrowed money is being used. So statement B is partially correct.