Return on Investment (ROI)
What is Return on Investment (ROI)?
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.