What is normal return on investment?
There is no norm. The internal rate of return should exceed the cost of capital. A low risk, on going enterprise might be satisfied with an IRR = 7- 10%, while a more risky venture might require 15- 25% IRR.
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-The income from a venture that ia distributed to investors
A Return on Investment (ROI) is calculated to measure the performance of one investment relative to another. ROI is expressed as a percentage and is based on returns over an associated time period, usually one year. For example, a 25 percent annual ROI means that a $100 investment would return $25 in one year. Thus, after one year, the total investment becomes $125. Write down the amount of your total investment, including fees and expenses, if any. Write down the amount of profit or loss associated with your investment. Calculate the ROI by dividing the profit by the total investment. Many mutual fund websites provide with calculators to find the rate of returns according to the investment made. Reliance Mutual fund is one of the AMC that allows the user to calculate the rate of investment returns.
It's a human nature that if he devotes/(invest) his resources he looks for an healthy outcome (Return) i.e., he wants return on what he had invested. In short it is ROI. (RETURN ON INVESTMENT) . A Businessman looks his healthy ROI as how much Profit he had gained from his deployed resources (Health / Wealth). All businesses give returns that return can either result him profit or loss. A smart & successful investor will always care about security of his investment along with desired results. The percentage of return depends on the type of business you have chosen. High risk gives high returns and the low risk gives low returns.. Taking example of Our Company an ROI greater than 24% is an healthy ROI from both angles. But an exceptionally high ROI (40% etc.) can lead to the fact that there is some gap which is in reverse direction.. CALCULATION OF ROI . ROI can be calculated as follows: (Example of our R.S. /R.D.). 1. ROI = (NET PROFIT /Net INVESTMENT)*100. Net Profit = Gross Profit - Expenditure. 2. ROI = No. Of Rotations * Net Profit Margin. No. Of Rotations = Turn Over / Investment. Net Profit Margin = Gross Profit - Expenditure. Gross Profit = %Gross Margin * Turn Over. Investment: Paid up Stock, Credit, Claims. Gross Profit : Gross Profit stands for (Total Turn Over * % Gross Margin). Expenditure: Expenditure covers each & every money spent in relation with that business. That can be. 1. Staff Salary. 2. Office Expenses (Tele, Elec., Rent, Insurance, Printing etc.). 3. Distribution Cost. 4. Any Discount. 5. Miscellaneous. Taking example : . 1. A TO Z Agency . A . Sales and Turnover . 1. Concern Sec Sales (year 2005) (Rs.lakh). 98 . 2. Gross Margin @ 4.76% (in Rs.lakh). 4.6648 . B . Investment (in Rs.lakh per month) . 1. Stock. 4.01 . 2. Credit. 3.6 . 3. Avg Claims. 0.12 . Total. 7.73 . Total Investment (in weeks). 3.79 . 4. CET (in days). 5 . Net Investment (in weeks) . 3.07 . Net Investment (in Rs.lakh/month) . 6.27 . No. of Rotations . 15.6 . C . Cost Elements (in Rs. per month) . 1 . Salesmen - Salary + TA/DA + misc . 4500 . 2 . Other Staff Cost . a. Godown keeper. 1000 . b. Computer operator. 0 . c. Any other staff. 0 . Total . 1000 . 3 . Distribution cost . a. Cost of Diesel. 0 . b. Cost of Oil. 2000 . c. Vehicle Maintenance. 1200 . d. Vehicle Driver - Salary + TA/DA. 2800 . e. Delivery Boy - Salary. 2000 . f. Cost per dispatch. 0 . g. Any other delivery costs. 650 . Total . 8650 . 4 . Office Expenditure . a. Telephone and Fax. 700 . b. Electricity. 300 . c. Printing and Stationery. 200 . d. Rent and Insurance. 500 . e. Miscellaneous. 0 . Total . 1700 . 5 . Discount to Trade . 8100.00 . Total operating Costs (Annualised) . 2.87 . Net Margin (in Rs.lakhs) . 1.79 . Net Margin % . 1.83 . Return on Investment . 28.6 . ROI of A TO Z Agency comes out 28.6% which is an healthy ROI. . REGARDS . NARESH SINGH . LUXOR PARKER
Focus on Profit Objective to cost and Profit Readily available data Relevant Different sized divisions, it is fair to different sizes. Managers accept projects with higher ROI's
How is the concept of a normal return on investment related to the distinction between business and economic profit?
Economic profit is the profit made on an investment of some sort in which inflation and other economic factors have been considered. Normal return on investment is just the net profit made in the investment (simple subtraction).
Investment return and risk are fundamental to understanding market behavior. Return on investment is essentially profit made by an investor. Profits and losses must be analyzed carefully, as simple percentage comparisons give misleading answers. Risk refers to the probability of depreciation as well as its potential magnitude, which can exceed original invested amount. Risk and return on investment are directly correlated; higher risk begets a smaller chance of high return and vice versa.
Calculating the return on investment you actually want to know whether the investment will give you positive value in the end. You wouldn't want to waste your money, right? Thus you want to make sure that the net present value of your investment is positive. However, inflation deteriorates the value of money. 100 money today most likely can buy you more today than in a year's time. That's why you are interested in adjusting the expected future cashflows to the expected inflation rate. Overall, not accounting for inflation will overestimate the value of investment. In other words, you could choose something which will not bring you benefit.
To calculate ROI, the benefit (or return of money or income gained) of an investment is divided by the cost of the investment. ROI is usually shown as a percentage. This formula can also be used to suit a number of different situations. Here is the formula for ROI: (Income from Investment - Cost of Investment) / Total Cost of Investment = ROI
There are so many variables but simply put It is Money Earned-Investment/Investment=ROI
Return on investment simply indicates the difference of the future value of funds tied to a financial instrument as compared to their present valuation. For example, an asset with a market price of $100 today and $110 one year from now would be said to earn a 10% return on investment. That is, the future value ($110) minus the value today ($100), all divided by the value today ($100). Several factors influence the rate of return on an investment. These include, but are not limited to: inflation, which effects future cash flows of an investment, risk premiums, which provide for larger returns given a larger acceptance of risk, and timing, which effects valuation when compounding or discounting projected cash flows.
Return on investment is the amount that you get back for investingin something. The formula is ROI=(Profit *100)/(Investment * numberof years.)
Return on investment is the amount of profit on the invested money after deducting taxes, safety of investment is the risk factor involved in the investment. Such as risk is high safety of investment is less.
Yes the amount would be a taxable income amount after your return of investment amounts exceed your cost basis in the investment.
Answer It doesn't know anything! Try a different website!
Stockholders can earn a return on their investment in two manners. Most commonly Stock Appreciation, and rarer Dividends. The most common manner for an investor to earn on stocks is through "Stock Appreciation." This means the stock price has risen, and now allows for an investor to receive more for the asset than what they paid. This is generally most associated with the class of stock known as "Common Stock." Although rarer, and often reserved for early investors and company insiders there is another class of stock known as "PREFERRED STOCK." Preferred Stock can also pay a "DIVIDEND" quarterly, annually or intermittently. A dividend is a payment of a share of profits sent to holders of the preferred stock.
The return on investment formula:ROI=(Gain from Investment - Cost of Investment)/Cost of Investment.
Risk/return ratio expresses a portfolios investment positioning; generally "Aggressive," "Growth," "Balanced," ""Conservative," and "Income," or similar. The higher the potential return, the higher the risk.
(Amount received Or receivable - original investment) divided by original investment is the total return on investment. If ROI is to be calculated on annual basis, divide the total ROI by number of years. Express in terms of percentage.
if you give 20pigs usually u can get around 30 chickens or maybe if your lucky 10 cows but id try to bargain and make deals like 20 pigs for 10 chickens and your daughter or something of the sorts.
This variable is not constant. Your return on investment can dependon how much you put into it, how much you make from it, and otherfactors.
Return on investment is calculated by subtracting investment capital from the return, taking into account inflation, taxation and the time frame involved.
An absolute return is involved with investments by the measure of gain or loss that is expressed as a percentage in the invest of a business capitals.
The exact amount of returns is very difficult to calculate as the interest rates and balance can change frequently, it would be best to contact your local banker for more information.