HomeHome SearchSearch MenuMenu Our productsOur products

How to analyse the return on your company's investments to ensure they keep growing

by , 05 June 2014
Part of running your business includes making certain investments. The profitability of these investments is a lot more important than you might ever imagine.

If you leave them, assuming they're growing or earning you interest, you could be losing money without ever realising it.

But there's a type of financial analysis you can use to measure your investments returns. This analysis is Return On Investment or ROI and Investopedia.com says it's one of the most popular ways to analyse what your investments are bringing in.

Read on to learn how you use this measurement...

***********
Does your CC follow the CC Act or the Companies Act?
 
Do it right or face penalties
 
***********

How to do Return On Investment analysis

The Practical Accountancy Loose Leaf says Return On Investments is really helpful for you, as a business owner. This because it'll show you if an investment is doing well, in which case, you may want to invest more money. Or, you'll see it's doing badly and then you can remove your money.
 
Even better, it's versatile and simple to do. 
 
simply use the following five analytical tools to do ROI analysis …
 
***********
Discover how to improve cash flow, analyse your financial statements and eliminate fraud in your company…
 
***********

Five analytical tools you can use when you do Return On Investments analysis

You must use these tools to do ROI analysis:
1. Return on equity (ROE);
2. Return on assets (ROA);
3. Return on operating assets (ROOA);
4. Operating asset turnover rates (OATOR); and
5. Financial leverage.
 
You must take the net profit after tax, divide it by the beginning of the period and then times it by 100 to work out your ROE, ROA and ROOA.
 
Take your revenue and divide it by the operating assets to work out your OATOR.
 
Then take your operating profit and divide it by your net profit for your financial leverage. 
 
All of these will show you the financial gains or losses you made on your investment return.
 


Related articles




Related articles



Related Products



Comments
0 comments


Recommended for You 

  Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance



Here are all the most interesting, thought-provoking and common tax questions
asked by our subscribers over the last tax year – everything from A to Z!

To download Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance click here now >>>
  Employees always sick? How to stop it today



Make sure you develop a leave policy to regulate sick leave in your company.

BONUS! You'll find an example of the leave policy and procedure in this report.

To download Employees always sick? How to stop it today click here now >>>
  Absenteeism: Little known ways to reduce absenteeism



This FREE e-report will tell you how you can reduce absenteeism in your workplace while avoiding the CCMA and without infringing your employees' labour rights.

To download Absenteeism: Little known ways to reduce absenteeism click here now >>>
  7 Health & safety strategies to save you thousands



Don't let a health and safety incident cost you one more cent. Implement these seven
strategies in your company today.

To download 7 Health & safety strategies to save you thousands click here now >>>