ROI, or return on investment, is a ratio or percentage figure that measures the profitability or effectiveness of a certain business or investment.
The profit from an investment is divided by the investment’s cost to determine the return on investment (ROI). ROI specifically assesses the investment’s return in relation to its cost of acquisition. This means that to calculate ROI, all needed is to divide the return (net profit) by the acquisition expenses (net cost). The percentage value can then be obtained by multiplying the result by 100.
Naturally, a high ROI figure denotes a successful investment, whereas a low ROI denotes an insufficient return to cover the costs.
