Management And Accounting Web

ROI Read Diagram*

Provided by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

MAAW's Chapter 14 | Return on Investment Main Page

Citation: Martin, J. R. Not dated. Return on Investment Read Diagram.  Management And Accounting Web. https://maaw.info/ROIReadDiagram.htm

Return on Investment Read Diagram

CTR = Capital Turnover Ratio = (Sales ÷ Investment)

ROS = Return on Sales = Net Income ÷ Sales

ROI = Return on Investment = (CTR)(ROS)

Examples:

When the CTR is 2.5 and the ROS is 4, the ROI is 10.

When the CTR is 2.5 and the ROS is 8, the ROI is 20.

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*Read, R. B. 1954. Return on investment - Guide to decisions. N.A.C.A. Bulletin (June): 1231-1244. (3D version of this graphic).

Related chapter summaries:

Clinton, B. D. and S. Chen. 1998. Do new performance measures measure up? Management Accounting (October): 38, 40-43. (Summary).

Martin, J. R. Not dated. The Du Pont ROI Graphic.  Management And Accounting Web. https://maaw.info/DuPontROIGraphic.htm

Martin, J. R. Not dated. Chapter 14: Investment Centers, Return on Investment, Residual Income and Transfer Pricing. Management Accounting: Concepts, Techniques & Controversial Issues. Management And Accounting Web. https://maaw.info/Chapter14.htm