ROI (Return On Investment)

Whether an organization invests in the stock market, real estate, or its own business, return on investment -ROI- is a key financial ratio that measures the gain or loss of an investment relative to the initial investment.

 

The ROI metric is a simple and quick method of evaluating the profitability of almost any transaction. It can be calculated on the basis of a shareholding or real estate investment or to influence financial decisions, compare the profitability of a company and analyze investments.

 

Return on investment is a simple ratio that divides the net gain or loss of an investment by its cost.

 

How to calculate ROI?

 

To calculate the return on investment, the amount earned from an investment must be divided by the cost of the investment and multiplied by 100. The result must be represented as a percentage.

 

ROI = (net profit / investment cost) x 100

ROI = (present value - investment cost / investment cost) x 100