Return On Investment (ROI)

Last updated on
February 17, 2022

Return on investment (ROI) is a popular financial metric for calculating the likelihood of a profit from an investment. It is a ratio that compares an investment's gain or loss to its cost. Although ROI is a ratio, it is more commonly expressed as a percentage than as a ratio.ROI is calculated by subtracting the initial investment value from the final investment value (which equals the net return), then dividing the new number (the net return) by the cost of the investment, and finally multiplying it by 100.The most commonly used ratio is net income divided by the cost of an investment.

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