Return on Investment (ROI)
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Definition: Return on Investment (ROI) measures the profitability of an investment by comparing the gain or loss to the initial cost. It’s expressed as a percentage and is used to evaluate the efficiency or potential return of an investment.
Example: If you invest $1,000 in a business and earn $1,500 back, your ROI is calculated as:
(Gain minus Cost) divided by Cost, multiplied by 100. In this case: ($1,500 minus $1,000) divided by $1,000, multiplied by 100 equals 50%.