![]() Returns can be going concern measurements calculated monthly, quarterly, or even annually. It is also important to be sure the same measurement is being used to evaluate multiple investments: differing tools can result in apples to oranges comparisons. Ultimately, whatever measure is used, it is imperative that investors understand what the measurement is evaluating. Sometimes the choice of how to measure return on investment is determined by investor preference, and in other cases, it’s driven by standard operating procedures within an industry. Return on investment is not a necessarily a measurement itself, on the contrary, it is more a category of measurement tools designed to provide insight into the operational results of an investment or business venture.ĭifferent investors choose different measures by which they evaluate operational performance. However, more often than not the actual response will be “It depends”. ![]() Upon completion of a financial projection for a new project, the first question asked is often, “What’s my return?” The anticipated reply is a simple percentage or an empirical value representing projected profits. This, benchmarking amongst peers is a critical activity for holistic performance measurement. Returns are measures not only of a venture's performance, but also a measure of one firm to another.ROA and ROIC, in particular, shed light on how a venture will be profitable. For debt investors, financial stability is key, making the Going Concern Measures an important metric for them to monitor, to ensure that the performance of the business is maintaining itself and/or improving.The former to monitor returns from the initial investment and the latter, because a going concern return such as ROE will provide strong indications towards an exit route for the business, for example via IPO. Equity investors' main focus is typically IRR and ROE.At a minimum, all return calculations should be made, as they are useful and insightful to different types of investors in a venture.
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