A measure of operating performance and efficiency computed as net income divided by total investment over the period being considered is known as what?

• A. Return on investment (ROI)
• B. Cost-benefit analysis
• C. Inherent risk
• D. Countermeasure

Answer: (A)

ROI measures how efficiently invested resources generate profit. It is calculated by dividing net income by the total investment over the period, so you’re looking at how much profit each unit of capital produced. This directly captures operating performance and efficiency, since a higher ratio means the organization is turning its invested funds into earnings more effectively.

Other concepts describe different ideas: cost-benefit analysis weighs costs against benefits to decide if a project is worthwhile; inherent risk refers to the natural level of exposure in an activity; a countermeasure is a control put in place to mitigate risk. None of these describe the simple profit-to-investment efficiency that ROI hands you. For example, ROI tells you the return per dollar invested, which is exactly what the question is asking.