Question

Ramandeep is a technical entrepreneur who started developing interactive websites of businesses. Due to lot of competition in this field he is experiencing a decline in the demand. He wishes to understand his revenue position as compared to his investment. Which one of the following combinations would help him in assessing the profitability of his business?

1. Economic Order Quantity
2. Return on Investment
3. Return on Equity
4. Break-even analysis

Options

• (i) and (iii)

• (iii) and (iv)

• (ii) and (iii)

• (i) and (iv)

Answer 1

(ii) and (iii)

(ii) Return on equity

(iii) Return on investment

Explanation:

• Return on equity: A company's profitability in relation to its equity is gauged by its return on equity. ROE can alternatively be conceived of as a return on assets less liabilities since shareholder equity can be computed by subtracting all liabilities from all assets.
• Return on investment: A return on an investment is a profit. It includes any shift in the investment's value as well as any cash flows that the investor gets from the investment, like interest payments, coupons, stock dividends, cash dividends, or the payout from a structured product or derivative.