Return on Investment.docx - Return on Investment(ROI is calculated with the following equation \u201cROI =(Current Value of Investment Cost of Investment

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

This preview shows page 1 out of 1 page.

Return on Investment (ROI) is calculated with the following equation: “ROI = (Current Value of Investment - Cost of Investment) / Cost of Investment” (Chen, 2019). In order to improve the ROI, 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 is struggling. The problem may be that the company has poor ROS, meaning they do not produce enough profit per dollar of sales. Likewise, the company may have too many investors which results in high stockholder equity. This translates to spending too much of the company’s revenue on investors equity thus lowering the ROI. So, in order to improve ROI, you must first determine why the ROI is struggling by narrowing down the options and analyzing the ROS and capital turnover. From there, an accountant might

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture