Return on Investment (ROI)

Return on Investment (ROI) serves as a performance indicator that assesses the profitability of an investment by comparing the net profit to the initial expenditure. Represented as a percentage, it offers a clear method for evaluating the efficiency of an investment and allows for comparisons with other opportunities.

ROI is essential for measuring an investment's profitability and effectiveness. It provides a straightforward percentage-based assessment for easy comparison, making it a widely recognized tool for analyzing various business projects.

Organizations utilize ROI to evaluate different investment alternatives, ensuring that funds are directed towards the most promising projects. This approach helps in prioritizing high-return initiatives and steering clear of those that could lead to losses. Ultimately, it supports strategic decision-making and enhances resource distribution.

This is the method for calculating your investment return.

Although both ROI and ROE assess profitability, they offer distinct perspectives on an investment's performance.

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