Return on investment (ROI) is a way to measure of performance of any investment. Through this process, we can evaluate the efficiency or profitability of any particular investment or activity.
To calculate you can use two different formulas. One is dividing the net return on investment by the cost of investment and then multiply it by 100. The second formula is dividing the difference between the final value of an investment and the initial value of an investment by the cost of investment and multiply it by 100.
You can use the result of ROI results to take any investment decisions. By comparing ROI with initial cost, you can calculate the difference between future and prior investments. You can also judge your personal investments by using the ROI formula.
The process of ROI is very simple and easy. You just need a few figures to complete the calculation. It has great capability to perform comparative analysis in a short period of time. Businesses can use it to measure the profitability of any action.