Answer (D) is correct . ROI is calculated by dividing income by invested capital. It is a key performance measure of an investment center. Invested capital may be defined in various ways, such as shareholders’ equity, total assets available, or total assets employed (which excludes assets that are idle). Total assets available is the measure that assumes the manager will use all assets without regard to financing.
Answer (A) is incorrect because ROI is based on all assets, not just current investment expenditures.
Answer (B) is incorrect because The calculation of ROI does not adjust for imputed interest on invested capital.
Answer (C) is incorrect because The denominator would not be limited to fixed assets.
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