Definition: Return on Investment (ROI) measures the financial gain or loss generated relative to the cost of an investment, helping organizations evaluate the efficiency and profitability of their spending.
Key Components of ROI (Return on Investment)
Cost: Total expenditure of the investment.
Return: Financial gain generated by the investment.
ROI Formula: (Gain from Investment - Cost of Investment) / Cost of Investment.
Benefits ROI (Return on Investment)
Performance Measurement: Evaluates the success of investments.