CHAPTER SEVEN

Return on Investment Measurements

THIS CHAPTER IS AIMED squarely at measurements that can be used to determine a company's ability to create a return on investment. These measures encompass net worth, several types of return on assets and equity, earnings per share, economic value added, and return on dividends. They can be used by investors to determine what to pay for a company's shares as well as to measure the return on investment. Company management can use these measures to determine its ability to generate a reasonable rate of return. The measures discussed in this chapter are:

Net Worth Book Value per Share Tangible Book Value Return on Assets Employed Return on Infrastructure Employed Return on Operating Assets Return on Equity Percentage Return on Common Equity Financial Leverage Index