In simple words, ROI (Return on Investment) is a key performance metric that evaluates the profitability of an investment. Most of you may already know that it measures the return relative to the cost of the investment. The formula for ROI is:
(Net Profit / Cost of Investment) × 100.
Never forget, a higher ROI demonstrates a more profitable investment. ROI is widely used in business, finance, and marketing. It is used to assess the efficiency of various activities such as advertising campaigns, product launches, or software purchases. ROI helps decision-makers determine where to allocate resources for maximum return.