Return on investment (ROI) can be expressed as which of the following formulas?

The correct formula for expressing Return on Investment (ROI) is represented by the concept of Sales Margin multiplied by Capital Turnover. This formulation provides a clear understanding of how ROI can be derived from two important financial metrics.

Sales Margin refers to the percentage of sales that a company retains as profit after incurring costs. It reflects the profitability of the sales generated by the company. Capital Turnover, on the other hand, measures how efficiently a company uses its assets to generate sales. This ratio indicates the amount of revenue that is produced per dollar of assets.

By multiplying Sales Margin by Capital Turnover, you effectively show how much net income is being generated for each dollar invested in assets. This dual focus captures both profit generation and asset efficiency, which are essential components of assessing how well a company is using its resources to achieve a return.

In summary, the combination of Sales Margin and Capital Turnover not only provides insight into profitability but also highlights operational efficiency, making it an ideal representation of ROI.