Cost-benefit analysis presents data as a ratio to determine financial impact on company profitability. The formula is: cost-benefit ratio = value of projected benefits divided by cost.
We have estimated that a training program on sexual harassment will cost $14,000 and result in a savings of $70,000 (the cost of the two settlements we paid last year).
What is the cost-benefit ratio of this training?
What is the return on investment after one year?
Do you agree that we can use the amount of our settlements from the prior year as our savings figure? Why or why not?