This website uses cookies to ensure you have the best experience. Learn more

Return On Investment Analysis

1233 words - 5 pages

Return on Investment Analysis

Profit

Every business must devise a means to make and measure the profit from an investment. Profit reflects the very nature of business. Businesses that provide a product or service want to know if their efforts in a particular field will result in financial gain (Wiens 1997). The concept "Return On Investment" provides a means to measure the profit obtained from an investment. I will discuss the area of return on investment from a training and staff development perspective and why it is important.

To Train or Not To Train

Companies and educational institutions at one time or another will face the question of whether training will help their company remain competitive. Training is very expensive and time consuming. The employee will miss time from work. Someone will have to fill in for the employee. The "fill-in" may not perform as well as the employee which results in lower productivity. Travel and site procurement add to the cost. The trainer will demand a salary and materials. A subject matter expert may possibly factor in the equation. Furthermore, the company usually will conduct a needs analysis to determine if training is the actual solution needed to increase profitability. All of these elements translate into time and money. However, research has discovered that a new medium of delivery has cut cost significantly. The medium is computer based training (Schriver 1999). The expense is reduced by travel, instructor hours, record handling, and productivity (Schriver 1999). Many businesses and educational institution are examining the possibility of computer based training. Many decision makers reason if the same results can be obtained at a cheaper rate, by all means implement the cheaper system. Nevertheless, investment in training has proven its worth over the years. In 1995, the American Management Association conducted a national survey of major businesses and identified a very strong interaction between increased training budgets and decreases in personnel. They found that 68% of businesses that had increased their training budget after a significant downsizing improved their profits (Stolovitch 1998). Training if needed, translate into a return on the investment.

Calculating Return On Investment

There are many ways to calculate return on investment (Kearsley 1986). Accounting professionals look at the Operating Income divided by the Average Operating Assets to determine the return on investment. Some accounting professionals fail to examine training investment in a positive light. Training investment usually ends up on the expense side of a balance sheet without any further consideration. Accountants look at capital, which loosely defined is a form of wealth used produce more wealth. Humans also fall in that category as employees of a corporation. The journal Performance Improvement devised a working model from some of the leaders in the field such as Schneider. Monnetta,...

Find Another Essay On Return on Investment Analysis

Risk Analysis on Investment Decision

840 words - 3 pages Risk Analysis PAGE 5 Running head: RISK ANALYSIS ON INVESTMENT DECISIONRisk Analysis on Investment DecisionKatrina WhiteUniversity of PhoenixMBA/540 - Maximizing Shareholder WealthNovember 10, 2008Oscar Lewis, InstructorRisk Analysis on Investment DecisionSilicon Arts Incorporated, a four-year old high tech firm with annual sales turnover of $180 million, has a two point agenda, which is to increase market share and keep pace with technology

Risk Analysis on Investment Decision

1097 words - 4 pages activities creates value, but also estimates the amount of value created by using the Net Present Value (NPV), Internal Rate of Return (IRR) and the Profitability Index (PI). According to Ross, et al (2005), the Net Present Value is the “… present value of future cash returns, discounted at the appropriate market interest rate, minus the present value of the cost of the investment … [that is dictated by the NPV rule that] …an

Analysis of a PHD Student´s Research on Investment Inequality

1515 words - 6 pages that investment plays a meaningful role in the overall income inequality during financial bubbles, and even in economic downwards, proving the third hypothesis. Research Methods: The Federal Reserve Board’s Survey of Consumer Finances (SCF) was the study used on this article for its main analysis. This survey dates from the 1992 to 2010, and includes the information of household income, wealth holding, and other financial topics. In addition, the

Risk Analysis on Investment Decision - Silicon Arts, Inc

1039 words - 4 pages market. When working through the scenario with a discount on the cash flow the wireless communications project had a NPV of 11,769 and the digital imaging had a NPV of $4,508 showing an internal rate of return of 29.20% for wireless communication and 22.40% for digital imaging. After the analysis of whether to use an outside vendor or stay in-house the NPV decreased to $12,172 for wireless and $2,759 for digital with small changes to the IRR

MBA 540 Analysis on Investment Decision for Silicon Arts, Inc. SAI

854 words - 3 pages the project. A new plant producing 1000 units per day will initiate the opportunity costs for the project's expected 1 to 3 year for a cash investment of $18 Million. An additional plant producing 3000 units per day will be set up to help in 3-7 years, resulting in$16 Million cash investment. $437,500, 3.5% of 12.5 million can be easily produced by the second plant alone running on a little over half the capacity in one year's time. In just one

Discuss these titles about the ASX: risk and return, aims of investment, considerations for setting up a portfolio, shares & alternative investment. Make reference to the profiles!

1739 words - 7 pages investments.Aims of Investment:Essentially, there are three main principles in investment:Maximise income on the asset through interest, rents and dividends.Capital gain due to assets value increasing.Minimise risk through diversification of portfolio.These principles of investment are generally correct, nonetheless due to the principle of risk and return strategies of investment will vary. Cathy being a profile of a High-Roller could invest now to

he Risk and Return of Human Capital Investments

945 words - 4 pages Title: The Risk and Return of Human Capital Investments (2013) Kristen Koerselman & Roope Uusitalo This paper looks at investment in human capital and the level of risk involved. The aim of this paper is to show how moments in lifetime income can be estimated from a shorter panel. The paper uses a 22-year panel (based on Finnish registers). Some of the techniques used in this short paper are mean and variance in lifetime earnings and

Investment apprial

791 words - 3 pages value. If the net present value is negative, taking on the investment today is equivalent to giving up some cash today, and the investment should be rejected. The NPV approach is not the only method to evaluate an investment, other approaches, such as the payback rule, the average accounting return, the internal rate of return, etc, are also commonly used by firms. The payback rule is widely used by large firms, because of its convenience to

Stryker Analysis

982 words - 4 pages % return. Therefore, since Option #3 offers a high and promising internal rate of return, it makes the investment desirable to undertake. Consequently, Option #3 would be consider the best option compared to Options #1 and #2. It should be noted that the IRR assumes that the company is going to be able to get this 21% return on the investment. Although, this may not be a realistic return to assume receiving on re-investments, the IRR is above the

Merrill Finch Inc. Case Study

2116 words - 8 pages state of the economy, and the security analysts have developed software to estimate the rate of return on each of these alternatives under each state of the economy. A chart showing the results of the analysis is in Appendix A of this report.Section 1 of this report begins with a discussion on the concept of Return. The calculations of each of the alternatives expected rate of return are also calculated and discussed. Section 1 then continues with

Foreign Markets: Foreign Countries Potential of Return on Investments

638 words - 3 pages This analysis takes into account the factors in evaluating foreign countries potential of return on investments to your investors. Our team has taken several factors including political, social, economic, technological, environmental, and legal indicators affecting the business of International Investment Inc. Political Environment: International Investment Inc. foreign markets cut across 18 relatively stable governments that provide a

Similar Essays

Return On Investment On Renewable Energy

1065 words - 5 pages For the average person in North America, utilities bills are an ever increasing expense. Homeowners who decide to use renewable energy in the form of geothermal, wind, or solar power are seeking a way to defray the cost of utility bills. As the average cost of solar power set up or kits decrease and the popularity increases, the question becomes what is the long-term return on investment. For a better understanding of return of investment on

Security For Information Technology: Return On Investment

620 words - 2 pages Return on Investment (ROI) is a common issue among corporate management. The question can seldom be answered to everyone's satisfaction. It is especially harder to answer in the information security context where a lack of data makes it difficult to quantify what exactly security spending earns.The management knows the threat is there but they do not feel the threat. In other words, they cannot justify the spending as they do not have a clear

Chapter 2: Return On Investment Of Training Program

2425 words - 10 pages Chapter 2: Return on Investment of Training Programmes When you can measure what you are speaking about and express it in numbers, you know something about it; but when you cannot measure, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind; it may be the beginning of knowledge, but you have scarcely in your thoughts advanced to the state of science, whatever the matter may be. —Lord Kelvin (1824–1907

Web Services Return On Investment: Working Out What You're Getting Out Of Web Services In This Article, The Authors Have Tried To Keep A Realistic, Pragmatic, And Balanced Approach

1392 words - 6 pages Web Services Return on Investment:Working out what you're getting out of Web ServicesIn this article, the authors have tried to keep a realistic, pragmatic, and balanced approach in determining the return on investment on Web Services. It is worth mentioning that, no matter how promising a new technology is, promoting and encouraging its usage through such articles and papers is not justified until there is a solid business case for its adoption