ROI (Return on Investment) is a key financial metric used to evaluate the profitability of an investment. It compares the gain or loss generated relative to the investment’s cost, expressed as a percentage. The formula for ROI is:

ROI

(
Net Profit
Investment Cost
)
×
100
ROI=(
Investment Cost
Net Profit

)×100
A higher ROI indicates a more profitable investment. ROI is widely used in business, marketing, and finance to assess project viability, compare different investment options, and make informed decisions. However, it doesn’t account for factors like time, risk, or external conditions, which can also impact returns.