|Overview: Return On Investment|
|Definition||The gain or projected gain of an investment expressed as a percentage of the investment cost.|
|Related Concepts||Management Accounting|
What is Return On Investment?
John Spacey, updated on December 10, 2016
Return on investment, or ROI, is the gain or projected gain of an investment often expressed as a percentage of the investment cost. It is a common financial metric used to compare and evaluate strategies. There are numerous ways to calculate return on investment, with the following being a common variant:return on investment = ((gain from investment – cost of investment) / cost of investment) * 100For example, if you invest $20 in an advertisement that produces $100 in net revenue the return on investment is ((100-20)/20)*100 = 400%.
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