Question

Requirements:

1. What is an ROI ratio? What are its advantages and disadvantages?
2. Create a list of Balance Scorecard of a business of your choice

Answer 1

ROI Ratio- Net return on an investment calculated as the ratio of Net profit or loss to total cost of investment. The ratio is expresses as percentage and may be positive or negative depending on profit or loss from investment.

Advantage- It is simple to calculate but effective measure and used to compare performance of companies in any sector or industry.

Disadvantage - It does not take into account time factor and further, similar accounting standards etc. must be used while comparing in a sector or industry otherwise the inference may not hold if different standards are used.

Sample Balance Scorecard for Bank

There are four dimensions for Balance Scorecard for Bank as detailed below:

1. Financial- Improve revenues by cross-selling of products

Improve profitability by clearly identifying and targeting critical customer accounts

2. Customer- Full understanding of customer needs

Providing speedy and reliable service

3. Internal Process- Leveraging technological tools(big data/analytics etc.) to strengthen and improve processes

Improving and streamlining credit approval for new customers

4. Learning & Growth- Implementation of online training modules for employees

Timely updation of important hardware and software applications