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One financial ratio, viz., return on investment, is a ratio that attempts to measure a firm's?

(a)    Leverage(b)    Profitability(c)    Liquidity(d)    Reliability(e)    Serviceability.

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Question ajoutée par Vinod Jetley , Assistant General Manager , State Bank of India
Date de publication: 2015/03/25
Zahid Hussein
par Zahid Hussein , President , Sustainable Resource Foundation (SuRF)

RoI - Return on Investment is certainly a firm's important financial indicator. The RoI differs with overall revenue, size of the proceeds and a firm's objectives and targets. 

Paolo Borchetta
par Paolo Borchetta , Managing Director , NIMM International Mauritanie Mining

I'd like to add few concepts.

ROI is defined as (total gain from an investment - cost of the investment)/cost of the investment

For long term investments the actualized cost of the gain vs. the total investment should be calculated; for short term investment is easier and more immediate:

If John invested5000 $ and made6500 $, ROI would be ()/5000 =30%.

Sometimes ROi is utilized as equivalent of the ROA (Return On Assets) depending on what is used at the nominator of the ratio as you can see from Vinod calculations

ROA = Net Income/Total Assets

some analysts use the EBIT for calculating the ROA (EBIT/Total Assets) in order to identify the operational profitability of the company without contamination of the "I=Interests" and "T=Taxation" components  which is attributable to the financial management of the company (former) and the tax regime (latter) on which the company has little control.

Another variation could be ROA = EAIBT/Total Assets (Vinod)

However in the current times of  "impairment check" requirements; cleaning the Total Assest at the denominator from intangible components could be useful we have then the:

RONA = Return On Net Assest

My two cents.

 

Mohammed Shahid Ullah
par Mohammed Shahid Ullah , Executive Director (Finance) , Coal Power Generation Company Bangladesh Limited

Return on investment ratio is to measure firms of Profitability.

Wasi Rahman Sheikh
par Wasi Rahman Sheikh , WAREHOUSE SUPERVISOR , AL MUTLAQ FURNITURE MFG

Answer will be option b) <<<<<<<<<<<<<<<

Vinod Jetley
par Vinod Jetley , Assistant General Manager , State Bank of India

(b)

  Return on investment is the ratio of earnings before taxes to that of total assets. So, it attempts to measure profitability.

Option--------------------------------b

Thanks

Nasir Hussain
par Nasir Hussain , Sales And Marketing Manager , Pakistan Pharmaceutical Products Pvt. Ltd.

.... . . .

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(b)    Profitability

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