Tutor profile: Madhav M.
An entrepreneur invested $10 million in a company and received revenues of $1 million, $2.5 million, and $3 million over the first 3 years. What is the ROI for the three years of the company?
ROI stands for return on investment, which determines how much a company has recovered its investment through the company's revenues. As a result the formula for ROI = Revenue/Investment. Using this the formula the 1st year's ROI = 1/10 which is equal to 10% and applying this to year 2 and 3, we calculate the ROI to be 25% and 30%, respectively.
What are the four criteria evaluated in a SWOT analysis?
SWOT analysis is a tool that is used to evaluate a company on four criteria, two internal, and two external. The internal criteria are S, strengths, and W, weaknesses. These two criteria look at the company's unique strengths and weaknesses in accomplishing it's business goal. The other two criteria are external focused, which are O, opportunities, and T, threats. These two criteria evaluate the opportunities the company has in the current environment to expand successfully while the threats evaluate external factors that could pose a risk to the continued success of the company.
A company bought inventory in the following order: 10 units at $5, 20 units at $7.50, and 50 units at $10. If the company sold 60 units, how much higher is the cost of goods sold using LIFO method compared to FIFO method.
LIFO method stands for Last in First out, which means that the inventory bought most recently is sold first. Therefore if 60 units are sold, the first 50 sold were purchased at a price of $10 each and the remaining 10 were purchased at a price of $7.50, totaling cost of goods sold of $575. FIFO stands for First in First out, meaning the inventory bought first was sold first. As a result of the 60 units sold, 10 were purchased at $5, 20 were purchased at $7.50, and 30 were purchased at $10, totaling cost of goods sold of $500. Therefore, LIFO method has a cost of goods sold $75 higher than the FIFO method.
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