Return on Investment.docx - Return on Investment (ROI) is...

This preview shows page 1 out of 1 page.

The preview shows page 1 - 1 out of 1 page.
Return on Investment (ROI) is calculated with the following equation: “ROI = (Current Value ofInvestment - Cost of Investment) / Cost of Investment” (Chen, 2019). In order to improve theROI, you must increase the value of the investment. By analyzing the company’s return on sales(ROS) and capital turnover, an accountant can determine why the value of investment isstruggling. The problem may be that the company has poor ROS, meaning they do not produceenough profit per dollar of sales. Likewise, the company may have too many investors whichresults in high stockholder equity. This translates to spending too much of the company’srevenue on investors equity thus lowering the ROI.So, in order to improve ROI, you must first determine why the ROI is struggling by narrowingdown the options and analyzing the ROS and capital turnover. From there, an accountant might
End of preview. Want to read the entire page?

Upload your study docs or become a

Course Hero member to access this document

Term
Fall
Professor
NoProfessor
Tags
Return On Investment ROI, company s return

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture