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What is ROI (Return on Investment)?

The article from MSN Money discusses Return on Investment (ROI), a key performance indicator used to evaluate the efficiency or profitability of an investment or compare the efficiency of different investments. ROI measures the return on an investment relative to its cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment; the result is often expressed as a percentage. The article explains that ROI can be used for various purposes, from assessing the potential profitability of a new business venture to evaluating the performance of stock investments or real estate. It highlights that while ROI is a simple and widely used metric, it has limitations, such as not accounting for the time value of money, risk, or additional costs like taxes and inflation. The piece also touches on variations of ROI like Return on Assets (ROA) and Return on Equity (ROE), and advises investors to consider other factors alongside ROI for a comprehensive investment analysis.

Read the Full MSN Article at:
[ https://www.msn.com/en-ph/money/savingandinvesting/what-is-roi-return-on-investment/ar-BB1qiGL6 ]