Question : What ratios are affected by "Return on Investment"?
Option 1: Gross profit ratio and net profit ratio
Option 2: Earnings per share and net profit ratio.
Option 3: Capital employed ratio and assets turnover ratio
Option 4: Net profit ratio and capital turnover ratio
Answer (1)
20th Jan, 2024
Correct Answer: Net profit ratio and capital turnover ratio
Solution :
The profit from an investment is divided by the investment's cost to determine the return on investment (ROI).
Return on Investment = Operating Profit Ratio*Capital turnover ratio
Therefore, the Return on Investment affects both the Net Profit Ratio and the Capital Turnover Ratio.
Hence option 4 is the correct answer.
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