Business Terms Glossary

Return On Investment

Definition of Return On Investment

Return On Investment, or ROI, is the amount of profit (return) based on the amount of resources (funds) used to produce it.

If you invest $100 in an initiative, and it returns $110, the investment will be deemed to have had a positive ROI, 10% to be precise.

Note that the previous statement doesn't mention how long it took to earn that $10. For that reason, many financial gurus dismiss ROI calculations as simplistic because they don't properly account for the time value of money.

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