Metric of the Day! · Start Here Skool

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Metric of the Day!

Return On Investment (ROI)

Return on investment (ROI) is a financial performance measure that calculates the profit or loss generated by an investment relative to the amount of money invested. ROI is often used as a key metric to evaluate the effectiveness and efficiency of an investment decision.

ROI = (Gain from Investment - Cost of Investment) / Cost of Investment

The result is expressed as a percentage or a ratio. If the ROI is positive, it means that the investment has generated a profit, whereas a negative ROI indicates a loss.

ROI can be used to evaluate the performance of various types of investments, including stocks, bonds, real estate, and business projects. It can also be used to compare the performance of different investments and to determine which investments are worth pursuing.

In business, ROI is often used to evaluate the profitability of marketing campaigns, capital investments, and other business initiatives. A high ROI indicates that the investment is generating significant returns, while a low ROI may suggest that the investment is not worth the resources being invested.

Overall, ROI is a useful tool for investors and business owners to evaluate the effectiveness of their investment decisions and to make informed decisions about where to allocate resources.

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