What is meant by the terms margin and turnover in ROI calculations?

Q: What is the profitability index? When is it used?

A: Capital investment analysis: Capital investment analysis is the process by which management plans,…

Q: What are important profitability ratios?

A: Ratio analysis: The analysis of a company using the financial ratios and comparing its trends and…

Q: What is the Importance of the Profit Ratio?

A: Profit ratio: Profit ratio is utilized to assess the corporation's capacity to make revenue as…

Q: How does the lower of cost or market relate to profit margins?

A: Answer: The lower cost or market implies that, depending on how historical costs and market costs…

Q: What are the Profit margins?

A: Answer: Profit margin represents a product, company or sector profitability. It nothing but the…

Q: Why do you think the change in the index of labor cost per unit of output is a useful lagging…

A: A lagging indicator is an observable variable whose direction changes after the interest’s target…

Q: What formula do you use to calculate ROI?

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Q: What is the biggest disadvantage of using ROI to evaluate investment centers?

A: Return on Investment: Under return on Investment, the investment opportunity with the highest rate…

Q: Create an example showing how residual income is calculated. What information is used in computing…

A: Return on investment (ROI):   Return on investment evaluates how efficiently the assets are used in…

Q: How to calculate profitability analysis?

A: Sales revenue: It is the revenue earned by a business on selling the goods or providing services to…

Q: List the most important assumptions of cost-volume-profit analysis.

A: Cost Volume Profit Analysis (CVP Analysis): This analysis is helpful in determining that how any…

Q: Analyze the profitability graph that illustrates the factors/accounts that are needed to calculate…

A: The profitability graph: The profitability graph depicts all the inputs that are needed to compute…

Q: What is Operating Profit Margin and how is it Calculated? What is a high quality of earnings?

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Q: Describe following:* Market approach* Income approach* Cost approach

A: Market Approach:   Market approach is a method used to assess the value of an asset depending on the…

Q: What does price/earnings ratio tell you?

A: Price-to-Earnings Ratio shows relation between entity’s stock price relative to earnings made on…

Q: What does ROI measure?

A: Return on Investment: Return on Investment is a profitability measure which determines a company's…

Q: What is the incentive of management in computing efficiency ratios?

A: Efficiency ratios examine a company's ability to use its assets and handle its commitments…

Q: What is operating profitability ratio (OP)?

A: These ratios evaluate a firm’s ability to earn profits. They help the stakeholders of the company to…

Q: What does it mean to use the DuPont model to help explain a decrease in ROI?

A: Introduction: DuPont analysis is done to find out the various drivers that account for the return on…

Q: what is profitability ratio?

A: Financial ratios provide information related to the company. There are various types of ratios like…

Q: What is the return on investment (ROI)?

A: Introduction: An investment is the acquisition of an asset or object with the intention of earning…

Q: Why is there typically a rise in ROI or residual income across time in a division? What undesirable…

A: Return on investment (ROI):   This financial ratio evaluates how efficiently the assets are used in…

Q: What does the price earning ratio indicate?

A: Price to earnings ratio (P/E ratio) compares the price with earnings per share. It will be…

Q: Why is profitability analysis necessary, with a particular emphasis on return on investment? When…

A: Profitability is a phrase that relates to the metric used to quantify earnings. Profitability…

Q: What variable affecting gross profit should the manager focus his attention? Why?

A: Gross Profit is the profit arrived at by deducting cost of goods sold from the turnover or the…

Q: Discuss some financial variables that affect the price-earnings ratio?

A: The price-Earning Ratio refers to the ratio between earning per share and the current market price…

Q: What does it mean when ROI has decreased even though net income hasincreased?

A: Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in…

Q: Define the term Profit margins?

A: Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities,…

Q: How is cost-volume-profit analysis useful?

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Q: “RI is not identical to ROI, although both measures incorporate income and investment into their…

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Q: What does it mean to have a Price- earnings ratio that is higher or lower than the norm?

A: Price-earnings ratio (P/E ratio) = price per share/earnings per share

Q: What ROI will equate the PV of Inflows and the PV of outflows? a. Internal rate of return (IRR) b.…

A: Option b is incorrect because cost of capital means the cost that is incurred by the organization on…

Q: What is the relationship between NPV and profitability index (PI)?

A: The concept of net present value is used to decide whether to invest in an investment or not. It is…

Q: what are the advantages of calculating a supplier performance index?

A: Supplier Performance Index: A supplier performance index is used to determine the total cost of…

Q: Define Return on sales

A: Ratio analysis: It refers to the quantitative technique of financial analysis that allows gaining an…

Q: Operating leverage measures the: Change in profit when sales changes. Change in Contibution when…

A: Solution: Operating leverage = Contribution margin / Net income  Therefore Operating leverage…

Q: what is earning forecasting?

A: The act or process of using certain data to predict future earnings of a publicly-traded company.…

Q: Is the accounting rate of return (ARR) the same thing as the return on investment (ROI)?

A: Yes, Accounting rate of return (ARR) the same thing as the Return on investment (ROI). The…

Q: What advantages are there to breaking down the ROI computation into two separate elements, marginand…

A: Ratio analysis is a technique that is used to gain knowledge of the company’s profitability,…