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Return on Investment, or ROI, is often viewed as a test of management's efficiency in using available resources. Regardless of the size of the company, capital is considered a scarce resource, and should be used efficiently. The concept of Return on Investment can be applied not just to the company itself, but within the company to evaluate a subsidiary, a department, or even an individual project.
There have been a number of measures that leverage the concept of Return on Investment. Each of these measures, or ratios, is well-suited to a particular situation. The three most common measures using the return on investment concept are:
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