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Return On Investment

Introduction

What actually is a return on investment? It is the net income after income tax divided by average owner’s equity for the period (Coltman & Jagels, 2001).
Return on investment is known as a profitability ratio, because it provides information about management's performance in using the resources of a small business to generate income. Return on investment and other financial ratios can provide small business owners and managers with a valuable tool to measure their progress against predetermined internal goals, a certain competitor, or the overall industry. Return on investment is also used by bankers, investors, and business analysts to assess a company's use of resources and financial strength (ROI, n.d.).
The use of return on investment (ROI) is exploding. ROI has become one of the most challenging and intriguing issues. Several books have been developed on the topic, and consulting firms have been developed to tackle this critical and important issue.......


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Approximate Word Count: 2152
Approximate Pages: 9 (250 words per double-spaced page)

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