Question

“Return on Investment is a single comprehensive measure that contains everything happening within the organisation” Explain the statement and illustrate its computations with imaginary figures

Answer 1

Return on investment is a computation that is used to measure the value of a company's profitability and the efficiency of its investments.  ROI is calculated as follows:

Net profit/cost of investment x 100%

If santos invested Rs 100 in a given company and he got Rs.120 in return, then return on investment would be:

The net profit = 120 - 100 = Rs. 20

ROI = net profit/investment value x 100%
        =20/100 x 100%
        =  20%