ROI Flashcards
1
Q
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A
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2
Q
What is ROI
A
One of the metrics to evaluate profitability and general financial health. ROI is a calculation of the monetary value of an investment versus its cost. The ROI formula is: (profit minus sales cost) / cost. If you made $10,000 from a $1,000 effort, your return on investment (ROI) would be 0.9, or 90%.
3
Q
How do you calculate ROI
A
ROI is calculated as the net profit during a certain time divided by the cost of investment, which is then multiplied by 100 to express the ratio as a percentage. The equation looks like this:ROI = (Net Profit / Investment) x 100The value of net profit should be taken from your company’s profit and loss (P&L) statement.
