Rate of Return (ROR), also known as Return on Investment (ROI), Rate of Profit or sometimes just Return, is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principle, or the cost basis of the investment. ROI is usually expressed as a percentage rather than a fraction.
Return on Investment = Net Income or Net Profit (after Tax) / Investment
or,
Return on Investment = Net Income / Book Value of Investment
or,
Return on Investment = Net Income / Cost of Investment
Note :- Return on Investment evaluates the efficiency of an investment, means how much Company is generating return on its investment.
There is unaudited financial results for the quarter/half year ended 30, Sept 2010 and Balance Sheet also:
From the above information we have following details:-
Net Profit After Tax for 30 Sept 2010 = 61.87
Investment for 30 Sept 2010 = 13082.34 (Fixed Assets + Investment + Current Assets Loans & Advances + Unamortized Expenditure) Return on Investment = Net Profit After Tax / Investment
So, Return on Investment = 61.87 / 30175.55 = .0047 or .47%
Analysis:-
Return on Investment is .0047 means Company is generating Rs. .0047 or .47 % from its every unit of its investment.
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