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Return on Investment
ROI Project: Phase #1
Return on Investment (ROI): An examination of ROI financial analysis and its historical roots with the DuPont Company

Return on Investment (ROI): An examination of ROI financial analysis and its historical roots with the DuPont Company
Like it or not, with the current state of the economy, as well as, enforced implications of the Affordable Care Act, a large number of hospitals and healthcare agencies will close their doors for good this year. Perhaps the most common cause of these closures will be the result of inadequate financial performance. Like any business entity, it is the lack of proper financing that ultimately kills any healthcare organization. There is a basic fundamental principle of finance that no healthcare organization can ignore; ultimately, the organization must generate a return from its investment that at least equals the cost of the financing supporting that investment. If the overall return on investment (ROI) is not equal to greater that the organization’s cost of funds, financial failure will occur (Cleverley, 1990). ROI has been an essential aspect of financial accounting ever since a group of financial experts at E.I. du Pont de Nemours and Co. (DuPont) invented the concept in the early part of the century (Southerst, 1993). DuPont’s concept of financial analysis has recently become a model used by many businesses to evaluate and visualize the critical factors that contribute to ROI and hence shareholder value (Stavros, 2005). The purpose of the following report is to examine the general financial concept of the Return on Investment (ROI) and its historical roots with the DuPont Company.
It is critical that a healthcare organization first understands how much investment is needed to meet or maximize the organization’s mission, as well as, what mix of equity and debt will be used to finance the organization’s required investment. Return on Investment (ROI) is the prime

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