Asked by Eribel Almonte on Jul 20, 2024
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The denominator in the formula for calculating the return on investment includes operating and nonoperating assets.
Nonoperating Assets
Nonoperating assets are assets that are not essential to the primary business operations and may include investments, unused land, or other assets held for future use.
Operating Assets
Assets used by a business in its day-to-day operations to generate revenue, such as machinery, buildings, and inventory.
Return On Investment
A measure used to evaluate the efficiency of an investment or compare the efficiencies of several different investments, calculated as net profit divided by the cost of the investment.
- Understand the components and calculation of return on investment.
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Learning Objectives
- Understand the components and calculation of return on investment.
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