What does the return on investment (ROI) ratio mean?
Asked 4 years ago
Does anyone have an example that would help me understand what the return on investment ratio means? I know that it is a key financial ratio, but I don't quite understand it.
Abeeha Qasmi
Tuesday, October 12, 2021
Return on investment refers to the return revenue on business investment. Through ROI, you can measure the profitability or return on costs and other business operations.
Suppose you want to spend 100$ on ads; now, you will use ROI to calculate the payback of this investment. If the ROI is high, only then you'll go for it.
To calculate ROI, divide the net return on investment by the total investment cost. Then multiply it by 100. ROI is a financial metric ratio, but it is mostly expressed in percentage.
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