Return on Investment, or ROI for short, is a ratio or percentage value that reflects the profitability or efficiency of a certain trade or investment. It is a simple-to-use tool that can generate an absolute ratio or a value in percentage . As such, ROI can also be used when comparing different types of investments or multiple trading operations.
Specifically, ROI evaluates the return on an investment in relation to its purchasing cost. This means that the calculation of ROI is simply the return divided by the total acquisition costs . The result may then be multiplied by 100 to get the percentage value. Naturally, a high ROI value indicates that the investment was profitable, while a negative ROI means the return was lower than the costs. The calculation of ROI is based on the following equation:As an example, imagine that Alice bought 100
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