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    Return On Investment

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    Archit Soni
    The document defines return on investment (ROI) as a performance measure used to evaluate the efficiency of an investment. ROI is calculated by dividing the benefit or return of an investment by the cost of the investment and expressing it as a percentage. A positive ROI means the investment was profitable, while a negative ROI means the investment lost money. The document also lists the steps to calculate ROI, which include determining all costs, estimating returns, establishing a timeline, and performing the calculation.

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    Return On Investment

    Uploaded by

    Archit Soni
    16 views1 page
    The document defines return on investment (ROI) as a performance measure used to evaluate the efficiency of an investment. ROI is calculated by dividing the benefit or return of an investment by the cost of the investment and expressing it as a percentage. A positive ROI means the investment was profitable, while a negative ROI means the investment lost money. The document also lists the steps to calculate ROI, which include determining all costs, estimating returns, establishing a timeline, and performing the calculation.

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    Return on Investment

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    The document defines return on investment (ROI) as a performance measure used to evaluate the efficiency of an investment. ROI is calculated by dividing the benefit or return of an investment by the cost of the investment and expressing it as a percentage. A positive ROI means the investment was profitable, while a negative ROI means the investment lost money. The document also lists the steps to calculate ROI, which include determining all costs, estimating returns, establishing a timeline, and performing the calculation.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    16 views1 page

    Return On Investment

    Uploaded by

    Archit Soni
    The document defines return on investment (ROI) as a performance measure used to evaluate the efficiency of an investment. ROI is calculated by dividing the benefit or return of an investment by the cost of the investment and expressing it as a percentage. A positive ROI means the investment was profitable, while a negative ROI means the investment lost money. The document also lists the steps to calculate ROI, which include determining all costs, estimating returns, establishing a timeline, and performing the calculation.

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    Archit Soni (Roll No.

    30, Sem VI, PGDBM, SLIMS) Definition of 'Return On Investment - ROI' A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.

    In the above formula "gains from investment", refers to the proceeds obtained from selling the investment of interest. Return on investment is a very popular metric because of its versatility and simplicity. That is, if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should not be undertaken. Keep in mind that the calculation for return on investment and, therefore the definition, can be modified to suit the situation -it all depends on what you include as returns and costs. Determining the return on investment is a very important part of any investment review. Whether youre investing in savings accounts, stocks, real estate, capital upgrades, or new business ventures, estimating a return on investment will aid you in choosing among investment options. Various steps involved in calculating RoI are as follows: Step 1. Calculate all the costs associated with an investment.

    What are the initial upfront costs associated with the investment? What are the maintenance costs? Are there any fees or taxes associated with the investment? What kind of research costs will you incur to properly evaluate (i.e., due diligence) the investment? How much of your time will this investment consume? Your time is valuable, so a complicated project could have real opportunity costs.

    Step 2. Estimate or calculate your returns.


    How much do you expect to gain from the investment? When do you expect returns to happen?

    Step 3. Establish a timeline for costs and returns. Draw a simple timeline or just list in chronological order all the costs and returns you discovered in steps 1 and 2.

    Step 4. Calculate return of investment. This is the meat of the process and the most challenging step of calculating the return on an investment.

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