How To Calculate Return On Investment
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How To Calculate Return On Investment
Follow finance analyst Grant Hobson as he takes you on a step-by-step journey on how to calculate a return on investment. He moves at a slow pace and shows you exactly what you need to do to determine the final outcome!
Hi, my name is Grant Hobson, I've been a finance analyst for the past six years. Today I'm going to run you through some financial performance methods as well as some investment appraisal techniques. How to Calculate Return on Investment: There are two factors that we need to take into consideration when calculating a return investment.
The first of these is your annual profits, which you can take from your income statement. The second example is the annual profits of the company, 250,000 pounds. Over this, we just need to calculate what the average NetBook Assets are.
You take those Netbook Assets from your balance sheet for this example, so value of the assets is 750,000 pounds. The investment of the year, your annual profits divided by the value of your Netbook assets, should give you a total of 33 percent. The return investment figure is used by a business to assess how well the money they have used from their retained earnings, which they've invested in machinery or into plan, or into any systems - how well that's being converted into the generated revenue and making profits.