QUOTE(Kasey @ Feb 16 2012, 06:22 PM)
If by ROI you mean return on investment, it is simply how efficient your investment is. If you invest in something, you calculate a percentage of how efficient this investment was. To calculate ROI, divide the gain of the investment by how much it costs to invest in that and calculate it as a percentage.
ROI is defined as Return On Investment. It is a performance measure for an investment.
The return on investment formula:
((gain from investment - cost of investment) * 100) / cost of investment = ROI%
Lets look at an example:
I purchase two widgets for $100. I sell each widget for $100 for a total of $200.
Now we will plug these numbers into our ROI formula.
gain from investment = 200
cost of investment = 100
((200 - 100) * 100) / 100 = 100%
In our above example, our Return on Investment was 100%.
I hope that helps to explain ROI.
