How to calculate payback period, Return on investment?

Question

I have got details of sales, cost of sales, variable and fixed cost, depreciation for 4 different years in my problem.i have been asked to calculate payback period, ROI and break-even analysis. and what is taken as cash flows from the given details? please help me its important.

Answer 1

payback period is when the costs of the asset have been redeemed.

i.e if asset cost £100k and for each year its in use it generates income of £25k, then the payback period is 4 years.

This is when the income has covered the expense of the asset.

ROI is the same thing as ROCE.

= total sales/ capital employed