Return On Investment, usually the abbreviation ROI is used. Sometimes the concept of productivity of investment, return on invested capital or return on long-term invested capital is used. It is a term that indicates the total profit from the investment. It is one of the key indicators to measure the effectiveness of investments. It is used for evaluation of the economic centers.
ROI = EBIT / Total assets - current liabilities)
ROI = EAT / (Total assets - current liabilities)
The indicator is similar to return on assets (ROA), the calculation differs by the denominator, in which only long-term invested capital is instead of total assets.
Use of the ROI in practice: In the enterprise it used by CFO in financial analysis to analyze ratios.
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