adopted. It is of note that the overall return on investment ratio can be calculated in a variety of di ?erent ways. For example, return (pro ?t) may be before or after payment of debt interest. Capital employed may be measured as total capital employed in the business, or just as the equity (shareholders’) capital alone. Which measure is appropriate depends upon the use to which the ratio is being put. If the focus of interest is in the e ?cient use of ?nancial resources by the ?rm as an entity, then pro ?t before interest and taxation (PBIT) may The accounting perspective 7 Figure 1.1. Outline pyramid of accounting ratios. Return on investment = Net profit/Capital profit Sales Sales Capital employed Sales revenue less Cost of sales Current assets Fixed assets Stocks Cash Debtors X
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