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UNDERSTANDING RETURN ON INVESTMENT
Return on investment (ROI) plays a major role in business, but it can be a difficult concept to grasp. Understanding Return on Investment shows you how to better utilize this essential tool by simplifying and clarifying all its important points. This invaluable guide includes information on:
- The effect of ROI on investment and disinvestment decisions
- The various forms of ROI and how they provide different measures for evaluating investment activities
- The relationship of ROI to ROE (return on equity)
- The use of ROI in evaluating investment centers in a decentralized operation
- How ROI is used to evaluate managers
- The use of weighted average cost of capital (WACC) in making investment decisions
If you use ROI, but are confused or unclear about some of its details, you′ll definitely profit from Understanding Return on Investment, a complete guide to this all–important performance indicator.
ROI and the DuPont System of Financial Analysis.
ROI and ROE.
Problems with ROI in Segments.
How ROI Affects Investment and Disinvestment Decisions.
Determining Profit and the Investment Base.
How to Value the Investment Base.
Gross Margin Return on Investment.
Contribution Margin Return on Investment.
Cash Return on Investment.
Analyzing Sales Revenues.
ROI and Decentralized Management.
ROI and Transfers Between Segments.
Weighted Average Cost of Capital.
The Time Value of Money.
Discounted Cash Flow Methods.
Payback and Accounting Rate of Return.
Comparison of Capital Budgeting Methods.
Important ROI Ratios.
FRANKLIN J. PLEWA, Jr., is Professor of Accounting at Idaho State University. The recipient of honors and awards for both teaching and research, he is the author of many books and articles. He is the coauthor with George T. Friedlob of Keys to Improving Your ROI, Financial and Business Statements, Understanding Income Statements, and Understanding Cash Flow.