Question
Return on investment (ROI) is often expressed as follows: Income/Investment = Income/Revenues Revenues/Investment Requirements: 1. What advantages are there in the breakdown of the computation
Return on investment (ROI) is often expressed as follows:
Income/Investment = Income/Revenues Revenues/Investment
Requirements:
1. What advantages are there in the breakdown of the computation into two separatecomponents?
2. Fill in the blanks for the following table:
| Companies in Same Industry | ||
---|---|---|---|
| A | B | C |
Revenues | $500,000 | $200,000 | ? |
Income | $150,000 | $60,000 | ? |
Investment | $250,000 | ? | $1,000,000 |
Income as a percentage of revenues | ? | ? | 3.0% |
Investment turnover | ? | ? | 2 |
ROI | ? | 6% | ? |
After filling in the blanks, comment on the relative performance of these companies as thoroughly as the data permit.
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