Return On Investment (ROI)
2 July 2021
Return on Investment (ROI) (also referred to as the Rate of Return or Rate of Profit) is a simple financial indicator to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments.
ROI is a measure of the money gained from an investment compared to the amount of money invested.
ROI = (gain from investment – cost of investment) / cost of investment
This indicator is included in the book: Key Performance Indicators – the 75+ measures every manager needs to know, which contains an in-depth description of this KPI, as well as practical advice on data collection, calculations, target setting, and actual usage.
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