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Definition – What is the ROI (Return on Investment)?
Return on investment is the return on money invested. It is listed as a percentage.
Formula – How to calculate ROI
ROI = (Investment Gain / Investment Cost) x 100%
Example
A company has an investment gain of $5,000 and investment cost of $10,000.
ROI = ($5,000 / $10,000) x 100% = 0.5000 x 100% = 50.00%
Therefore, this company has a 50% return on investment.
Sources and more resources
- Wikipedia – Return on investment – Wikipedia’s entry on ROI.
- Entrepreneur – Return on Investment – A short entry on ROI from Entrepreneur Magazine’s encyclopedia.
- Investopedia – Return on Investment & FYI on ROI: A guide to calculating return on investment – A pair of articles discussing ROI.