Two Ways Of Improving Return On Investment –
The earning power or the return on investment ratio is a central measure of the over all profitability and operational efficiency of the firm. It shows the interaction of the profitability and activity ratios. It implies that the performance of a firm can be improved either by generating more sales volume per rupee of investment or by increasing the profit margin per rupee of sales.
Earning power (ROI) = Net profit after taxes
Total assets.
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