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Accounting Question

Comments

  • #2
    Steve!
    Registered Users Posts: 39 ✭Steve!


    It's the interest a bank would pay you on a normal deposit account. Like now it's around 2-3%.


  • #3
    **Timbuk2**
    Moderators, Education Moderators, Motoring & Transport Moderators Posts: 7,395 Mod ✭✭✭✭**Timbuk2**


    It's not something that you calculate from the accounts, it's a comparison figure. You can compare it with Profitability figures, such as Return on Equity, Return on Capital Employed (to some extent).

    As said above, it's like what a bank would pay in a deposit account, and varies between 2-4% (of course it can be higher, but it usually isn't). Regardless of what it is, in both years in the given question, Return on Equity was 12%, so that's higher than the return on risk free investment.


  • #4
    Patri
    Closed Accounts Posts: 330 ✭✭Patri


    Thanks! Makes sense :)


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