Return on Invested Capital as a Determinant for Future Investment [a Case Study of Three Subsidiaries of Dangote Group.]
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Abstract
This research, return on invested capital as a determinant for future investment is devoted to study application of quadratic programming in portfolio management of three of the Dangote group subsidiaries namely: Dangote sugar refinery plc, Dangote flour plc and Dangote cement plc. The trio is quoted in Nigeria stock market. The data was extracted from abstraction of published sources . The data was formulated as a quadratic programming problem and Lindo software was used to analyse the data. From the analysis, the increment that yields the minimum variance with mixed investment opportunity is 24%. Hence the optimum solution to model one is f1 = 19.21%, f2 = 24.62% and f3 = 56.16% Which made use of return on capital invested on Dangote three viable subsidiaries. This implies that allocation of fund to these three subsidiaries in future should be done as follows; 19.21% to be allocated to Dangote flour, 24.62% to Dangote sugar and 56.16% to Dangote cements. (Ceteris Paribus). This will in turn gives an average increase of 24% on return on capital invested.
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Keywords: invested, capital, refinery, determinant, subsidiaries
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