![What is ROI, or Return on Investment? What is ROI, or Return on Investment?](https://sp-ao.shortpixel.ai/client/to_webp,q_glossy,ret_img,w_875,h_500/https://businessingmag.com/cms/wp-content/uploads/2015/11/business-terms.jpg)
ROI is the measure of an investment’s efficiency. Simply put, it’s a calculation that gives a comparable gauge of an investment’s profitability; ROI is especially useful in comparing two or more investments, is easily calculated, and it can be applied to a variety of investments.
ROI = (Gain from investment – Cost of investment) / Cost of investment
If a business finds the ROI of an investment is not positive or not as high as the ROI of a comparable investment, they adjust their strategy accordingly.
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