What is Return On Investment?

Return on Investment (ROI) is a metric used to evaluate the profitability of an investment relative to its cost. It measures the financial return generated from an investment, expressed as a percentage of the original investment. ROI helps businesses and individuals assess the effectiveness of their investments, whether in marketing, projects, equipment, or other ventures.

The formula to calculate ROI is

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

A higher ROI indicates that the investment has been more profitable, while a lower ROI suggests a less effective investment. This metric is widely used in various industries to determine the success of campaigns, projects, or business strategies.