Question

ROI is considered to be the master ratio which reflects overall performance of thecompany. then identify the reasons due to which internal auditors are asked to improve other ratios such as ORE and ROA

Answer 1

Answer:

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Answer 2

Return on Investment ( ROI) is the measure of performance that assesses the effectiveness and efficiency of various investments.

• However, ROI does not provide a means to validate the accuracy of the company's capital investment proposals and the utilization of assets. In such a case both ROE and ROA are beneficial.

• The Asset Return (ROA) tests how efficiently a company uses its assets to produce its operating income. If a firm carries no debt, it will be the same for its ROE and ROA. A high return on assets ratio generally means that the assets of a firm are productive and well managed.