GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The return on investment (ROI) may be calculated as
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Return on Investment /Net profit ratio
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( Net profit - preference dividend ) / No. of equity shares
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Net profit before interest, tax and dividend / Capital employed
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Net profit after interest, tax and dividend / Shareholder’s fund
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Explanation:
Detailed explanation-1: -Your gains include any revenue you earned from the investment. You do not subtract interest or income tax payments for this calculation. The chart above shows one company’s gains and costs in an investment.
Detailed explanation-2: -ROI = Net Profit / Cost of Investment So, in the above example, the Return on Investment will be 20%.
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