What is ROI (return on investment)?

ROI (return on investment) is a metric that measures how much profit or value an investment generates relative to its cost. Businesses use ROI to evaluate and compare the effectiveness of investments, projects, and spending decisions. The higher the ROI, the more profitable the investment.

Example: A company spends $10,000 on a marketing campaign that generates $15,000 in additional profit, resulting in a 50% ROI.

Related terms: Capital, Forecasting, KPI