ECONOMICS

Detailed explanation-1: -It is the measure of profit in comparison with the amount of capital invested in a division that makes us especially interested in the investment center as an approach to increasing company returns.

Detailed explanation-2: -Return on Investment (ROI) The most common measure of investment center performance evaluation is the return on investment. It is a better test of profitability and is defined as: ROI = Net income/Invested capital. ROI = [Net income X Sales (Revenue) ]/[Sales (Revenue) X Invested capital]

Detailed explanation-3: -Three common measures used to evaluate the performance of investment centers are return on investment (ROI), residual income (RI), and extra value added (EVA).

Detailed explanation-4: -Return on investment, or ROI, is a mathematical formula that investors can use to evaluate their investments and judge how well a particular investment has performed compared to others. An ROI calculation is sometimes used with other approaches to develop a business case for a given proposal.

Detailed explanation-5: -Return on Investment (ROI) is a popular profitability metric used to evaluate how well an investment has performed. ROI is expressed as a percentage and is calculated by dividing an investment’s net profit (or loss) by its initial cost or outlay.