ROI stands for return on investment and it refers to the result of an investment, what an investor gets from investing in something.
Usually, the higher the return on investment the lower the initial investment was meaning the that venture was well thought out.
Return on investment essentially helps businesses address the efficiency of their investments.
Click next to find out how to calculate return on investment.
In order to calculate the return on investment, the investment value should be subtracted from the final value of ‘return’ (meaning revenue/profit, the amount of money the business has made from an investment).
That result should then be divided by the total amount of the investment. Because ROI is usually presented as a percentage, the result should then be multiplied by 100.
For example, a company that has invested £1m in a new business and has had a return of £15m, has had a ROI of 1400%.
