The construction of a balance sheet is probably going to be one of the more difficult things that each of the business units in your organization will do. A lot of the costs will be hidden. The net risk adjustment return is required by law. In my opinion, this probably isn't the best measure to use, but Congress thinks it's a good measure. One of the reasons why this may not be the best measure to use is that it falls short in two areas.
Net risk adjusted return on investment ignores the last two.
Also, the net risk adjusted return on investment is an annual ratio and does not present a true picture because it does not reflect the total investment. To determine the financial health of the agency, both annual and multi-year measures must be developed for management. There is a need to balance short term benefits and investments with long term programs. Now, the net present value, in my opinion, is a much better measure. It gives you a great tool for assessing projects.