Return on equity (ROE), sometimes called "return on net worth” is a measure of profitability that calculates howmany dollars of profit a company generates with each dollar of shareholders' equity.ROE = Net Income / Shareholders' Equity.Return on Asset (ROA) is a measure of percentage of profit that a company earns in relation to its overall assets.ROA = Net Income / Total assets [20].Table 11 presents the profitability margins for the years 2018, 2019 and 2020.Table 11: Profitability margins.Profitability Margins 31-Dec-18 31-Dec-19 31-Dec-20Net Income Margin 14% 23% 27%Return on Equity 0.44 0.62 0.50Return on Assets 26% 27% 30%Payback Period (PBP) is the length of time required for an investment to recover its initial outlay in terms ofprofits or savings.It is calculated by dividing the cost of the investment by the annual net cash flow to determinethe expected payback period of years.Uneven cash flows occur when the annual cash flows are not the sameamount each year.PBP = Year before cash being positive + (Last negative cash flow / Cash flow to firm at that year).The net present value (NPV) or net present worth (NPW) is a measurement of the profitability of an undertakingthat is calculated by subtracting the present values (PV) of cash outflows (including initial cost) from the presentvalues of cash inflows over a period of time.Internal rate of return (IRR) is a metric used in capital budgeting measuring the profitability of potentialinvestments.Internal rate of return is a discount rate that makes the net present value of all cash flows from aparticular project equal to zero.IRR must be > Bank interest rate by a significant number.IRR is calculated byexcel using the formula: XIRR (PV,Date).The profitability index is an index that attempts to identify the relationship between the costs and benefits of aproposed project [21].Table 12 presents the economic feasibility measures for the project.
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