Question

1. Why is ROI an important number to know?

2. Looking at an organization, what do you think the most important items on the balanced score card would be and why.

Answer 1

Answer for 1)

ROI is very number as by it the investor can understand the return what can he get on his investment. It is key performance indicator to make what return i.e profitability that they can gain through investing in a particular project or in an organization and hence used for key decision making puposes.

Answer for 2)

The most important thing I see first is ROI I.e what return will I get if I invest in that particular organisation. Then I go for solvency ration to check whether the organization can meet their long term debt obligations as if the solvency ratios are less then definitely the organization may get liquidated. After that I would see the liquidity ratio to see whether they can meet their short term obligations as whether the solvency may be good but if there is liquidity crisis then it indicates that organisation is in trouble. Then the corporate governance to see it's interaction with its employees and also any recent changes in law which may be applicable to such organisation to see whether the organization following the law of the land successfully or not.