Return on Investment (ROI)

Return on Investment (ROI) is a key financial indicator that evaluates how effectively an investment generates profit relative to its cost. It is determined by dividing the net earnings from an investment by the amount initially invested and then multiplying the result by 100 to express it as a percentage. ROI serves as a useful tool for investors and organizations to assess the profitability of individual ventures and to compare the potential returns of multiple investment opportunities.

Example: If an investor invests ₹50,000 in a project and receives ₹60,000 upon completion, the ROI is calculated as: (₹60,000−₹50,000)/₹50,000×100=20%