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Return on investment

Return on investment

Description

Return of investment is a measure which evaluates the efficiency of investment. This is very popular and often used ratio. Data to calculate this ratio is collected from the income statement.

Norms and limitations

Negative value of ROI shows an unprofitable use of company’s assets.

While evaluating company’s activity it is important to realize that ROI is only one of many financial ratios and relying only on it would not be recommended.

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