Financial Terms / Q - R / Return on Investment (ROI)

Return on Investment (ROI)

Return on Investment (ROI) is a financial metric used to evaluate the performance of a particular investment. It is calculated by dividing the profits from an investment by the total capital allocated to the investment in percentage terms.

For example, if you invest a sum of $10000 in a business that gives you a profit of $1000 a year, the ROI of that business is 10%. ROI can be used to compare the performances of various investments.