Return on investment (ROI) is a financial metric that evaluates the profitability of your investment. It’s a ratio of returns (net profit or loss) relative to the investment cost.
The higher the ratio, the greater the returns will be. Although ROI is a ratio, we express it as a percentage for easier interpretation.
This guide will reveal how to calculate ROI (using examples), interpreting the calculations, and the benefits of ROI.
Regardless of your industry or size of business, being able to calculate ROI is extremely important for your business.
What’s more, knowing if your business is earning its money’s worth is an essential concept that business owners need to understand so they can strengthen their financial success.
When you calculate your ROI, you’ll better understand how your company is doing. Also, you can identify areas that need improvement to ensure you reach your goals. Let’s dive in.
