What Is Return On Investment (ROI)?

Patrick Curtis

Reviewed by

Patrick Curtis WSO Editorial Board

Expertise: Investment Banking | Private Equity

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.

To learn more about this concept and become a master at Financial Statement modeling, you should check out our FSM Modeling Course. Learn more here. 

Module 1: Getting Started

Module 2: Fundamental Concepts

Module 3: The Income Statement

Module 4: Working Capital

Module 5: PP&E and Intangibles

Module 6: The Cash Flow Statement

Module 7: Debt & Interest Schedule

Module 8: Finishing Your Model

Module 9: Bonus

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Patrick Curtis is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. He has experience in investment banking at Rothschild and private equity at Tailwind Capital along with an MBA from the Wharton School of Business. He is also the founder and current CEO of Wall Street Oasis This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.