Return On Investment And How To Account It?

Return On Investment

Return On Investment And How To Account It? Return on investment, which is often referred to in the world of the financial markets under the symbol “ROI” (an acronym for Return On Investment), is a financial measure used to measure the profitability of a particular investment option, or the comparison between several investment options. This measure calculates the size of the yield of an investment compared with the cost of this investment. The Matthew Hammersmith Omnia Investments account is to deduct the cost of investment of the final value of the investment and then dividing by the cost of investment, and is expressed as a percentage. Had, for example, the return on investment is going to say that 0.24 Earnings of 24% of the initial investment or short ROI = 24%.

What is the return on investment?
Return on investment is one of the most economic terms, more financial metrics used in the world of finance and investment. It is used to calculate the profit that has generated an investment, investor can not assess whether any investment in the stock market, bonds, commodities or even real estate market without the knowledge of how to calculate the return on investment. The benefit of this measure to give investors an idea of ​​the revenue generated has any investment and thus facilitate see which options may be better. In this article we will talk about the basics of return on investment and how their account and its importance as well as the factors that must take them into account in his account.

Return On Investment
Return On Investment

Interest return on investment lies in its ability to calculate the rate of profit (loss in the case had caused a negative number) compared to the total cost of investment, another way is a measure of return on investment by measuring the size of the profit generated from investment percentage. And it gives the investor an idea of ​​efficiency or profitability of every $ 1 (or any other financial unit) an investor in some way. In addition to its use as an Matthew Hammersmith Omnia APP indicator of the profitability of investments. Investors using the measure of return on investment as a benchmark to compare the performance of multiple investment operations of different sizes. Standard return on investment has become in recent years one of the most important financial indicators to measure the profitability of capital, in many fields, from industrial projects, stock market, bond market, real estate and even banking products, due to the ease of their account and give him a clear picture of the profitability of any investment may be understood by any an investor of any kind.

The standard return on investment by answering the following questions: What do we get in exchange for the amount that Snsttmrh? You will return higher than the cost of investing? Is expected return is worth the cost, which would be spent for? What is the net profit that Siderha investment? This standard by showing the size of net profit compared to the total cost of the size of investment. When the result is above 0, it means that a positive return on investment means that investment generates a profit on its owner, even if the resulting lower than 0, the return on Omnia investment will be negative and thus the investor to incur a loss of invested capital.

For example, if the return on investment equivalent to 10%, it means that the return exceeds the cost of investment by 10%, or in other words, the profitability of the investment is 10%, in contrast if the return on investment equivalent to 10% – the yield on the negative investment thus, the investment was not profitable, but has made a loss of 10%.
Calculate the return on investment
Return on investment is calculated by subtracting the value of the total cost of the initial investment or the value of the investment (Cost of investment) of the final value of the investment (Final investment or Total revenue) and then dividing the result by the total cost of the investment, according to the following formula:

return on investment formula – Omnia APP

As you can notice formula of calculating the return on a very simple and easy investment. The concept of the cost of investment and the total value may change at the end of investment from one area to another, for example, manager can calculate the return the company to investment by turnover net as the size of the final investment and the cost of purchasing goods that have been sold Kklvh investment, at a time may be someone else calculates the return on investment by the total sales and the cost of the products that were sold size. To illustrate more continued with us the following example:

We will assume that the investor decided to invest in the stock market by buying shares of a small company, despite the fact that his move carry a big risk but Msttmrna believe that the company’s shares will rise in the coming months. And therefore has the investor buys 5,000 shares valued at $ 1 per share. A year later the company’s share price rose as investors expected and arrived at the price of $ 3.5 per share, for the sale of shares bought and reap the profits. You can calculate the return on investment of the operation carried out by the investor as follows:

Return On Investment formula – Omnia Investments

You could see that the return on investment achieved by this investor is 2.5 or 250%. This means that the investment process has been very successful. In other words we can say that the investor a profit of $ 2.5 on every $ 1 he invests it. After the investor to reap the profits, the other investment process for $ 1000, where he bought shares of a company where the price per share of $ 1. After a while, the price reached to 1.25 and the investor felt that this price is the maximum price per share may reach him, so he sold his shares at this price, to be the quotient of return on investment are as follows:

ROI calculation – Omnia Investments

Return on investment in the process of 0.25 or 25%, which means that for every $ 1 in this investment der turnover of $ 0.25 (or 25 cents). Despite the return of 25% it is a very good return, but the first investment was much better than the second investment in terms of profitability obtained by the investor.

The calculation of return on investment in the same way no matter how different types of investment processes, no matter how different types of financial markets. The most widely used measure of investors to calculate the realized gain. Return on investment ROI is a measure historically, ie it measures the return on investment that you have made in the past. Therefore you should know that the investment, which may generate a good return in the past may not yield the same return in the future. For example, many of the stocks have given returns of between 200% and 500% during the period of growth, but then share prices collapsed. So you should not shall take investment decisions based on the yield achieved in the past.