Help me critique and give two advice on this post: Return on investment, referred to as ROI, is a metric used to measure performance profitability or efficiency of an investment. It measures the return on investment compared to its cost. ROI can also be used to evaluate the performance of divisions within a company. This metric measures management's efficiency and effectiveness in managing the company. It helps tie together the different phases of financial planning, cost control, sales objective, and profit goals. If ROI in a division increases, it means the overall company ROI will increase. A drawback to using ROI to measure performance within a division is that the different divisions in a company will have different results for ROI; some will have higher, and some will have lower results. For the divisions with the lower ROI, this could incentivize that division to find ways to help improve ROI. If a division has a higher ROI, it may demotivate that division if it has exceeded its expected results for ROI. The division may also cut back on some costs, such as productivity improvements or employee training, which could hurt profit over the long term. Residual income is a metric that can tell a company the net operating income or an investment earned above the minimum required results. This metric can measure divisional and managerial performance by charging each division the investment cost in long-term assets and working capital. Residual income is a good tool because managers view new investments differently using residual income versus ROI. With the residual income metric, managers are encouraged to make investments that will be profitable for the entire company; and those same projects may have been rejected by managers if they were evaluated by the ROI metric. Economic value added is used to evaluate the performance of a division within a company. Like residual income, economic value added (EVA) also charges each division with the cost of the investment. EVA differs from residual income, though, in a few ways. A division's current liabilities are subtracted from its total assets, using the weighted-average cost of capital in its calculation. If the results of the EVA calculation are positive, it means that the division (or company) surpassed expectations. If it is zero, this indicates sufficient achievement because it earned a return compensating for the risk. This calculation overcomes some of the limits we see with ROI and other metrics. It provides information that is more helpful to managers in making the correct decisions. For EVA to improve, the division managers would need to earn more after-tax operating income while using the same capital or use less capital to achieve the same after-tax operating income. EVA allows divisional managers to incorporate the cost of capital into decisions at the divisional level. This method is not easily manipulated. A downside to EVA is a relatively complex calculation. Do you want to know the percentage of revenue that eventually results in profit for a business? Return on sales is the financial metric that can tell you this. With this metric, you can determine if a business is running at its optimal potential. The return on sales metric is typically used by creditors and investors when analyzing a business or comparing companies. It shows how well a business is producing its core products. This is a good measure of how efficiently management runs the business by delivering the same level of net sales with fewer operational expenses, resulting in a higher return. With this metric, it needs to be noted that companies could tweak their earnings or expenses to make the return on sales ratio higher or lower. If too much emphasis is put on this financial ratio, it can cause management to lose track of how market conditions and the business cycle are holding up