5.3.4 Return On Investment Rate of Return on Investment indicates the profitability of business and is very much in use among financial analysts. ROI=
EBIT
X 100
Total Assets
Year Trend
Return On Investment 2003-04 2004-05 2005--06 32.7
39.7
2006-07
2007-08
30.6
18.6
35.7
Table 5.7 Rate of Return on Investment Ratio Analysis
Figure 5.7 Rate of Return on Investment Ratio Analysis Interpretation From the above observation it can be seen that ratio is fluctuating. In the year 2005-06 Rate of Return on Investment is slightly increase as compared to previous year Ratio is decreasing after 2005 at adecreasing rate because of asseets increase compare to sales. The company’s Total Assets is increased to 86.51%, so ROI is decreased so conclusion made that company is not utilizing its assets and investment efficiently.