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(a) Leverage(b) Profitability(c) Liquidity(d) Reliability(e) Serviceability.
RoI - Return on Investment is certainly a firm's important financial indicator. The RoI differs with overall revenue, size of the proceeds and a firm's objectives and targets.
I'd like to add few concepts.
ROI is defined as (total gain from an investment - cost of the investment)/cost of the investment
For long term investments the actualized cost of the gain vs. the total investment should be calculated; for short term investment is easier and more immediate:
If John invested5000 $ and made6500 $, ROI would be ()/5000 =30%.
Sometimes ROi is utilized as equivalent of the ROA (Return On Assets) depending on what is used at the nominator of the ratio as you can see from Vinod calculations
ROA = Net Income/Total Assets
some analysts use the EBIT for calculating the ROA (EBIT/Total Assets) in order to identify the operational profitability of the company without contamination of the "I=Interests" and "T=Taxation" components which is attributable to the financial management of the company (former) and the tax regime (latter) on which the company has little control.
Another variation could be ROA = EAIBT/Total Assets (Vinod)
However in the current times of "impairment check" requirements; cleaning the Total Assest at the denominator from intangible components could be useful we have then the:
RONA = Return On Net Assest
My two cents.
Answer will be option b) <<<<<<<<<<<<<<<
(b)
Return on investment is the ratio of earnings before taxes to that of total assets. So, it attempts to measure profitability.
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(b) Profitability
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