OMTEX CLASSES: Explain the Return on Investment (ROI)

Explain the Return on Investment (ROI)

ROI : This ratio measures the relationship between profit before interest, tax and dividend and capital invested or Capital employed. It is expressed in percentage. The following formula is used to find the ROI.


Here, capital employed refers to equity share capital, preference share capital, reserves and surplus, debenture capital and long term loans. Thus, it is the total amount employed/invested in the business.