Which statement about ROI calculation is correct?

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Prepare for the WGU MKTG 6040 D381 E-Commerce and Marketing Analytics Exam. Use flashcards and multiple choice questions with hints and explanations. Ensure your success on this crucial exam!

Multiple Choice

Which statement about ROI calculation is correct?

Explanation:
ROI measures profitability relative to the marketing investment, showing how efficiently marketing dollars convert into additional sales. The correct formula treats the gain as sales growth and the investment as marketing costs, so ROI = (sales growth - marketing costs) / marketing costs. This expresses how much profit you generate per dollar spent, not just the profit in dollars. For example, if sales growth is $50,000 and marketing costs are $20,000, ROI is ($50,000 - $20,000) / $20,000 = 1.5, or 150%. The other options miss the subtraction or the division by cost, so they don’t represent the return relative to the investment.

ROI measures profitability relative to the marketing investment, showing how efficiently marketing dollars convert into additional sales. The correct formula treats the gain as sales growth and the investment as marketing costs, so ROI = (sales growth - marketing costs) / marketing costs. This expresses how much profit you generate per dollar spent, not just the profit in dollars. For example, if sales growth is $50,000 and marketing costs are $20,000, ROI is ($50,000 - $20,000) / $20,000 = 1.5, or 150%. The other options miss the subtraction or the division by cost, so they don’t represent the return relative to the investment.

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