Question

in computing the margin in a roi analysis, which of the following is used? question 16 options: a) sales in the denominator. b) operating income in the denominator. c) average operating assets in the denominator. d) residual income in the denominator.

Answer 1

To compute the margin in an ROI analysis, sales are used in the denominator, resulting in the formula Margin = Operating Income / Sales.

Step-by-step explanation:

In ROI (Return on Investment) analysis, to compute the margin you use the formula where operating income is divided by sales. Thus, for the options provided, the correct answer is: sales in the denominator. Specifically, the formula for the margin in an ROI analysis is:

Margin = Operating Income / Sales

This margin calculation helps in understanding how much profit is being made from the company's sales before taking into account other financial considerations like investment in assets.