Which of the following statement (s) is correct in the context of Return on Investment?
Answer & explanation
Correct answer: option 1
Return on investment equals the net income from a business or a project divided by the total money invested in the venture multiplied by 100.
ROI = (Net Profit /Total Capital Invested) *100
For a true measure of how "own money" is being used, ROE is a good indicator (not ROI). ROI is a good indicator for total capital employed i.e. equity plus debt.