Return on investment refers to a financial metric that counts the profitability and efficiency of an investment relative to its cost. It quantifies the return or gain generated from an investment as a percentage or ratio of its initial price.
The formula to calculate ROI is as follows:
ROI = (Net Profit / Investment Cost) x 100
Net Profit is the total revenue or gain from the investment minus any associated costs or expenses. Investment Cost is the total amount invested or spent on the initiative, including direct and indirect costs.
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