Return on Investment – Don’t Bother With It
ROI = return on investment. It’s the very first thing you learn as an MBA. It is also a widely used yet blatantly overrated measure of performance for any investment in a company. In our case ROI has been used over the years to describe the desired percent return on an investment in a leveraged buyout. For example most private equity firms seek to achieve an ROI of greater than 33% per annum on any common equity dollar invested in their portfolio holdings. However, ROI can be used to analyze any investment.
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