Return on investment , Financial Management

Return on Investment (ROI)

In accounting it is a measure of the earning power of an industries asset. A high return on investments is desirable. ROI is widely described as net income divided by investments.  Thus, the term investments has three distinct interpretations in financial analysis each of that leads to a different calculation of return  on investment like return  on owners' equity, return  on assets, and return  on invested capital.

Posted Date: 10/16/2012 7:40:40 AM | Location : United States







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a) Year 2 Current Ratio = 700 / 300 = 2.33 : 1 Year 1 Current Ratio = 500 / 200 = 2.5 : 1 Year 2 Acid Test = (700 - 350) / 300 = 1.17 : 1 Year 1 Acid Test = (500 - 250) / 200 =