Most Common Mistake People Make In Calculating ROI ?

Beyond the numbers

This week you revisit financial analysis as a tool to provide insight into a firm’s performance and short- and long-term trends. Financial analysis consists of two parts. One is the calculation and determination of ratios relevant to return, liquidity, leverage, debt, asset utilization, and profitability/earnings. In most cases, this first step is the easier of the two parts.

The second part, and the most important part, is the analysis. What exactly is the picture that the numbers are presenting? This is the skill you want to develop as a financial analyst.

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This week, you are to read the following article (you can access the article via Business Source Ultimate):

“The Most Common Mistake People Make in Calculating ROI”. Harvard Business Review, April

Knight, J. (2015). The Most Common Mistake People Make In Calculating ROI. Harvard Business Review Digital Articles, 2-5.

Next, find a similar article on financial analysis. In your post include the link or the citation to the article.

In your post, address the following in your narrative:

  • In your own words, explain the main points of the the Knight article to a non-finance person.
  • What are the similarities and differences between your article and the Knight article? Compare and contrast the articles.
  • What have you specifically learned about financial analysis that you can use in your career moving forward?