Return on investment

Return on Investment (ROI) is a financial metric commonly used to measure the likelihood of gaining a return from an investment. It is a ratio that compares the gain or loss from an investment relative to its cost. The formula to calculate ROI is:

ROI = (Net Profit / Cost of Investment) x 100

Essentially, ROI allows investors and business owners to assess an investment's efficiency or compare the efficiencies of several different investments. A higher ROI indicates that the investment gains compare favorably to the investment cost.