Return on investment

What is a return on investment?

Return on investment (ROI) is a Profitability ratio that represents the profit ratio to the cost of an investment. It is calculated by dividing the net return on an investment by the cost of the investment and multiplying this result by 100% to get a percentage. It, therefore, indicates how much profit an investment has generated relative to its cost and is often used to measure the efficiency of an investment and compare it with other investment opportunities.