Usually defined as net income divided by investment amount.

Usually defined as net income divided by investment amount.

• A. Return on Invested Capital
• B. Return on Assets (ROA)
• C. Return on Owner's Equity
• D. Return on Tax income

Answer: (A)

The concept being tested is profitability relative to the capital put into the business. Return on Invested Capital uses net income in the numerator and invested capital (the sum of debt and equity funding the business) in the denominator, showing how efficiently all invested capital generates profit. This directly matches the description of “net income divided by investment amount.” Return on Assets uses total assets in the denominator, which blends financing and operating factors and can misstate efficiency. Return on Owner’s Equity uses only equity, ignoring debt financing. The last option isn’t a standard measure. So the best fit is Return on Invested Capital.

The concept being tested is profitability relative to the capital put into the business. Return on Invested Capital uses net income in the numerator and invested capital (the sum of debt and equity funding the business) in the denominator, showing how efficiently all invested capital generates profit. This directly matches the description of “net income divided by investment amount.”

Return on Assets uses total assets in the denominator, which blends financing and operating factors and can misstate efficiency. Return on Owner’s Equity uses only equity, ignoring debt financing. The last option isn’t a standard measure. So the best fit is Return on Invested Capital.