What Is Return In The Investment World?

What is Return (Image Ben White - Unsplash)

YOGYAKARTA - What is Return or Return? The usual return is known as financial return, in the simplest terms, is money generated or lost from investment over some period of time.

Returns can be declared nominally as a change in the value of the rupiah from an investment from time to time.

Returns can also be expressed as the percentage derived from the ratio of profit to investment.

Returns can also be presented as a net result (after costs, taxes, and inflation) or dirty returns that don't take into account anything except price changes. Even including investment 401.

Investors who carefully know that the right definition of return is situational and relies on financial data input to measure it.

The term omnibus such as profit can mean dirty, operating, clean, before tax, or after tax. The term omnibus such as investment can mean selected, averaged, or total asset.

Holding period returns is the return of investment as long as it is owned by certain investors.

Holding period returns can be declared nominally or as a percentage. If stated in percentage, the term often used is the rate of return (ROR).

For example, the returns obtained during a one-month periodic interval are monthly refunds and one year is annual returns.

Often, people are interested in the return of annual investments, or year-on-year (yoy) returns, which count price changes from today to the same date a year ago.

Returns during periodic intervals of different length can only be compared when it has been converted to the same length interval. It is customary to compare the returns obtained during the interval of the year. The process converts shorter or longer return intervals into annual returns called annual.

Nominal Return

A nominal return is the net profit or loss of the investment stated in the amount of dollars (or other applicable currencies) before tax adjustments, costs, dividends, inflation, or any other influence on that amount. This can be calculated by taking into account changes in investment value over a specified period of time plus any reduced distribution of any expenditure.

The distribution received by investors relies on the type of investment or business but can include dividends, interest, rental, rights, profits, or other cash flow received by investors. Expenditures paid by an investor depend on the type of investment or business but may include taxes, fees, costs, or expenses paid by an investor to obtain, maintain, and sell investments.

For example, assume an investor bought a $1.000 public stake, did not receive distribution, did not pay expenses, and sold the shares two years later for $1.200. The nominal return in dollars is $1.200 - $1,000 = $200 USD.

Return Ratio

The return ratio is part of the financial ratio that measures how effectively the investment is managed.

They help evaluate whether highest returns may result from investment.

In general, the return ratio compares the available tools to generate profits, such as investment in assets or equity against net profit.

The return ratio makes this comparison by dividing the selected assets or equity or total into net profit.

The result is the percentage of investable returns per dollar that can be used to evaluate investment strength by comparing them to benchmarks such as similar investment returns, companies, industries, or markets. For example, the return of capital (ROC) means the recovery of initial investments.

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