Return on investment (ROI)

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Return on Investment, or ROI, is a financial metric used to gauge the relative performance of an investment. It is basically the percentage of the original investment that has been returned to the investor as profit.

At its most basic meaning, ROI is defined as:

Image:ROI1.png

Or, more simply:

Image:ROI2.png

Many companies invest their money based on the calculation of ROI.

ROI relation with CAPEX Return on Investment is often related with Capital Expenditure. Companies invest money based on two focus points. 1. Long Term ROI 2. Short Term ROI

Long Term ROI Its is often related to the long term asset collection by the company. The company invest their money and considers it as the asset.

Short Term ROI Companies focuses on initial gains for their investment.

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