Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which method of calculating return on investment (ROI) makes it easiest to compare different investments?

Annualized rate of return

Gross profit margin

Total dollar return

Simple payback period

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Verified step by step guidance

Understand the concept of Return on Investment (ROI): ROI is a financial metric used to evaluate the efficiency or profitability of an investment relative to its cost. It helps compare the performance of different investments.

Analyze the options provided: Each method listed (Annualized rate of return, Gross profit margin, Total dollar return, Simple payback period) measures investment performance differently. Consider their definitions and applications.

Evaluate 'Annualized rate of return': This method standardizes the return over a year, making it easier to compare investments with different time horizons. It accounts for compounding and provides a consistent basis for comparison.

Evaluate 'Gross profit margin': This measures profitability as a percentage of revenue but does not directly address investment returns or allow for easy comparison across different investments.

Evaluate 'Total dollar return' and 'Simple payback period': Total dollar return provides the absolute return but lacks standardization for comparison. Simple payback period focuses on the time to recover the initial investment, which may not reflect overall profitability or efficiency.