DECA Accounting Applications Practice Exam 2025 – All-in-One Study Guide for Success!

Return on Investment (ROI) is a key metric used to evaluate the financial performance of an investment relative to its cost. It helps investors and businesses understand how effectively their capital is being utilized to generate profit. By calculating the percentage return based on the net profit from the investment and the initial cost, stakeholders can make informed decisions about where to allocate resources for the best return.

Option A highlights this primary purpose of ROI, which is to show how much profit is generated from the investment amount. This is essential for comparing different investments, evaluating business projects, or assessing marketing strategies.

The other options, while related to financial metrics in business, do not specifically encompass the core function of ROI. For instance, calculating total profit from sales is more about revenue generation rather than evaluating the investment efficiency. Assessing yearly income pertains to operational performance over a specific period rather than the effectiveness of an investment. Determining the overall market value of a business involves multiple factors, including asset values, liabilities, and market conditions, which go beyond the scope of what ROI measures.