Understanding ROI (Return on Investment)
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Questions and Answers

What is the primary purpose of ROI in business decisions?

  • To compare the efficiency of different investments (correct)
  • To estimate the cost of future projects
  • To determine the most effective sales strategy
  • To calculate the total profit of a business

What is a challenge of using ROI in business decisions?

  • It is time-consuming to evaluate the ROI
  • It is only applicable to small businesses
  • It is challenging to estimate future benefits and intangible gains (correct)
  • It is difficult to calculate the ROI

What is the formula to calculate ROI?

  • ROI = (Net Profit / Investment Cost) x 50%
  • ROI = (Net Profit / Investment Cost) x 100% (correct)
  • ROI = (Investment Cost / Net Profit) x 100%
  • ROI = (Net Profit + Investment Cost) x 100%

What is a benefit of using ROI in business decisions?

<p>It helps to make budget-efficient decisions (C)</p> Signup and view all the answers

Why is ROI important in developing future marketing strategies?

<p>It helps to identify the most profitable marketing strategies (B)</p> Signup and view all the answers

What is an example of a business decision where ROI can be used?

<p>Purchasing a new tool or equipment (C)</p> Signup and view all the answers

What is the main reason ROI is used to compare the efficiencies of multiple assets?

<p>To identify the most profitable investments (B)</p> Signup and view all the answers

What is an example of a business decision that utilizes ROI?

<p>All of the above (D)</p> Signup and view all the answers

What is the benefit of using ROI in business decisions?

<p>It allows for budget efficiency (B)</p> Signup and view all the answers

What is a limitation of using ROI in business decisions?

<p>It has difficulty in estimating future benefits and intangible gains (D)</p> Signup and view all the answers

What is the result of a higher ROI ratio?

<p>A higher benefit earned (B)</p> Signup and view all the answers

What is the purpose of ROI in analytics?

<p>To develop future marketing strategies (A)</p> Signup and view all the answers

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