Question

Provide a brief overview about why calculating ROI is strategically important and list common types of items and services that would be included in an ROI analysis. Next discuss what items and services may differ in ROI calculations between different types of training. For instance, consider the differences between a soft skills training like leadership development and training for machinists in a manufacturing environment.

Answer 1

Return on investment is an excellent variable for an organization's general performance.

Return on investment is determined as

Return o investment = Profit After Tax/(Average Total Assets) x 100

It gives us a proportion of benefit from a given degree of speculation. It discloses to us that how much profit we are getting for the speculation and permits us to consider our venture system.

In Manufacturing division like pharma, FMCG items, autos, and so forth use ROI as a vital variable as the numbers are unmistakably characterized. While in the administrations segment, it is hard to utilize ROI essentially in light of the fact that it is hard to follow the amount of benefit has come about because of the preparation gave. Still one can ascertain ROI in the event that one can relate the amount of benefit has originated from the preparation/administrations gave. In IT administrations segment ROI is being utilized.

Answer 2

ROI is an very good indicator of a company's overall performance. ROI is calculated as

ROI = Profit After Tax / (Average Total Assets) x 100

It gives us an accurate measure of profitability from a given level of investment. It tells us that how much return we are getting on the investment and allows us to think about our investment strategy.

Manufacturing sector like pharma, fmcg products, automobiles, etc. use ROI as a strategic indicator as the numbers are clearly defined. While in the services sector, it is difficult to use ROI simply because it is difficult to track how much of profit has resulted from the training provided. Still one can calculate ROI if one can relate how much of profit has come from the training/ services provided. In IT services sector ROI is being used.

Step-by-step explanation: