Return on Investment, or ROI, is an indicator of the profitability of an investment relative to the amount invested. The calculation for ROI is:
- ( Final Value of Investment - Cost of Investment ) / Cost of Investment
Return on Investment is used to assess the profitability on an investment for different potential investments. If a project has a lower ROI than another project, then it should be disregarded in favor of the other.
- Comparable Analysis
- Public Comparable Companies
- Return on Assets (ROA)
- Return on Equity (ROE)
- Trading Multiple