Saturday, March 1, 2008

Expanded ROI Formula

ROI = income ÷ invested capital

Expanded Return on Investment (ROI) Formula

ROI = income ÷ invested capital
ROI = (income ÷ sales) x (sales ÷ invested capital)
ROI = sales margin x investment turnover ratio

Amount of profit earned on every dollar invested.


Underlying reasons of Return on Investment (ROI) Equation

Profitability of Sales ---------- Profit/Sales Margin
Efficiency of Sales Generation --- Capital/Investment Turnover Ratio


Additional Accounting Examples and Explanations:

1 comment:

erickia said...

haha, cool blog, keep new update and i will be back soon

Popular Accounting Problems

The information on this site is for informational purposes only and should not be used as a substitute for the professional advice of an accountant, tax advisor, attorney, or other professional.