Return on Investment (ROI)

Return on Investment (ROI) is a financial metric used to evaluate the profitability or efficiency of an investment or business activity. It compares the profit or return generated from an investment with the initial amount spent or invested. ROI is typically expressed as a percentage and is calculated by subtracting the initial investment from the final value or profit, then dividing that by the initial investment. A higher ROI indicates that an investment has been more effective in generating profits relative to the cost.

Investors and businesses use ROI to assess the potential return of different investments and make informed financial decisions.