ROI – Return on Investment

ROI stands for Return on Investment, which is a ratio of the profit/loss made on investment over the fiscal year. It is expressed in terms of a positive or negative percentage of the base investment value during a particular year. e.g. If an investment of $1000 becomes $1100 by the end of the year, it is said to yield an ROI of 10%.

i.e. a 10% gain on the base amount. However, if it becomes $950 instead, it indicates an ROI of -5% (negative sign shows an incurred loss) i.e. a loss of 5% on the base amount.

ROI Formula

ROI = Net Income / Cost of Investment