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The term Return on Investment (ROI) means a performance calculation measure used to evaluate the cost effectiveness of efficiency of a business investment. It is also the performance measure used to evaluate the effectiveness or efficiency of a number of different investments. ROI tries to measure the appropriate amount of return on a particular business investment, in relation to the investment’s cost.

In the simplest of terms, return on investment (ROI) measures the profitability or money gained from an investment. It calculates the profit made from a particular investment compared to amount invested. There are a variety of ways to determine a ROI, however the most common is to divide net profit by total cost or simply subtracting total cost from net profit.

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