Understanding the Risk and Return for Future Business Investment

Assessing the risk and return ratio of investment would help in determining the effects that might arise in further expansion of the business. Therefore, prior knowledge of Return on Investment Ration (R.I.R) is significant. R.I.R measures the funds invested into the business by the owner. It helps the owner to determine the success of business from the onset and also gives guidance on the areas of further investments for more profits (U.S Securities and Exchange Commission, 2016). Besides, R.I.R provides an indication of the effectiveness of the profit generation, therefore, the higher the ratio, the larger the return on the owner’s assets. It is, therefore, prudent to gain the knowledge of risk and return ratio for the better understanding of a business investment in the future…………………..

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