ROI Definition

Bookmark and Share

ROI (Return on Investment) can be calculated in various ways. The most common method is Net Income as a percentage of Net Book Value (total assets minus intangible assets and liabilities).

Learn new Accounting Terms

INTEREST ONLY (IO),in securities, is the interest only portion of a stripped mortgage-backed security. For IO securities, all of the interest distribution is due to the registered holder based on the current face value of the underlying mort­gage-backed security.

 

COLLECTION PERIOD (Period Average) is used to appraise accounts receivable (AR). This ratio measures the length of time it takes to convert your average sales into cash. This measurement defines the relationship between accounts receivable and cash flow. A longer average collection period requires a higher investment in accounts receivable. A higher investment in accounts receivable means less cash is available to cover cash outflows, such as paying bills. NOTE: Comparing the two COLLECTION PERIOD ratios (Period Average and Period End) suggests the direction in which AR collections are moving, thereby giving an indication as to potential impacts to cash flow. Formula: ((AR (current) + AR (period ago)/2) / (Net Revenue / 365)

Suggest a Term

Enter Search Term

Enter a term, then click the entry you would like to view.