What Does the Ratio Return on Investment (ROI) Measure and What

question 104

Essay

What does the ratio return on investment (ROI) measure and what are some possible ways it can be computed?

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Definitions:

LIFO

A method to value inventory that assumes the latest items added to inventory are the first ones used or sold.

Perpetual Inventory

An accounting method where inventory quantities and costs are updated in real-time with each sale or purchase.

Ending Inventory

The total value of all products, goods, and materials in stock at the end of an accounting period.

Interim Financial Statements

Financial reports covering a period of less than a full fiscal year, often quarterly.