What is ROI (Return on Investment)?
ROI is a performance metric used to evaluate the efficiency of an investment or compare the efficiencies of several different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.
ROI Formula
ROI = ((Total Return - Total Investment) / Total Investment) x 100%
How to Interpret ROI Results:
- Positive ROI: Means the investment yielded a profit. The higher the percentage, the better.
- Negative ROI: Means the investment suffered a loss because the return was smaller than the cost of investment.