Return on net worth is another name for which performance metric?

• A. Return on total assets
• B. Gross margin
• C. Current ratio
• D. Return on investment

Answer: (D)

The main concept here is profitability relative to the capital invested by owners. Return on net worth measures how much profit the business earns for each unit of owners’ funds (equity) employed in it. In many practice contexts this is treated as a form of return on investment, because both ideas express efficiency in turning invested capital into profit. Net profit after tax divided by net worth shows how effectively the equity base is being used to generate earnings, which aligns with the idea of ROI.

Other metrics in the options don’t capture this focus. Return on total assets uses all assets as the base, not specifically owners’ funds. Gross margin looks at profitability after production costs, not tied to the invested capital base. The current ratio is a liquidity measure, not a profitability metric.