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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