Return on Investment

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ROI Project: Phase #1 Return on Investment (ROI): An examination of ROI financial analysis and its historical roots with the DuPont Company Return on Investment (ROI): An examination of ROI financial analysis and its historical roots with the DuPont Company Like it or not, with the current state of the economy, as well as, enforced implications of the Affordable Care Act, a large number of hospitals and healthcare agencies will close their doors for good this year. Perhaps the most common cause of these closures will be the result of inadequate financial performance. Like any business entity, it is the lack of proper financing that ultimately kills any healthcare organization. There is a basic…show more content…
du Pont de Nemours and Co., also known as the DuPont Company. Developed originally in the early 1900s by a finance executive at E.I. du Pont de Nemours and Co., of Wilmington, Delaware, the DuPont system of financial analysis provides a classic template for the decomposition process that can be used to build integrated systems of performance metrics. The traditional role that the DuPont formula plays in finance is to help investors select projects and investments that are the most profitable. The first application of the DuPont Model was in 1918. It was used to help with DuPont’s decision to become a major stakeholder in General Motors (Mitchell, Mitchell, & Cai, 2013). The DuPont accounting labs exported their ROI measure during Pierre du Pont 's reign from 1920 to 1923 as president of General Motors Corp., in which DuPont had taken a major stockholding. At GM and across corporate North America, ROI has since formed the basis of financial control (Southerst, 1993). Over the years, it has evolved into a classic diagnostic tool for identifying strengths, weaknesses and potential improvements to a business’s capital structure in order to maximize shareholder wealth. (Mitchell, Mitchell, & Cai, 2013). The DuPont model uses certain inputs such as sales, cost of sales, fixed assets and current assets. At successive stages they are added, subtracted, divided or multiplied

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