What is the meaning of ROI?
ROI (Return on Investment) measures the gain or loss generated on an investment relative to the amount of money invested. ROI is usually expressed as a percentage and is typically used for personal financial decisions, to compare a company's profitability or to compare the efficiency of different investments.
Why is it important to calculate ROI?
It is vital to calculate ROI because it is a key performance indicator (KPI) that is often used by businesses to determine the profitability of an expenditure. It's beneficial for measuring success over time and taking the guesswork out of making future business decisions.
What is the ROI formula?
The return on investment formula is calculated by subtracting the cost from the total income and dividing it by the total cost. The ROI formula is:
ROI = (Investment Revenue - Investment Cost) / Investment Cost
