Return on investment formula

Return on investment formula

ROI must also be return on investment formula to determine success or corporate value. Jump to navigation Jump to search This article is about the term in investing.

For articles on other subjects having the same abbreviation, see ROI. This article needs additional citations for verification. A high ROI means the investment’s gains compare favorably to its cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments. It is also used as an indicator to compare different investments within a portfolio. The investment with the largest ROI is usually prioritized, even though the spread of ROI over the time-period of an investment should also be taken into account.

ROI and related metrics provide a snapshot of profitability, adjusted for the size of the investment assets tied up in the enterprise. Marketers should understand the position of their company and the returns expected. In a survey of nearly 200 senior marketing managers, 77 percent responded that they found the “return on investment” metric very useful. Return on investment may be calculated in terms other than financial gain.

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