Return on investment (roi)
How to determine the Return on investment
ROI stands for Return on Investment. It is an indicator showing the ratio between your return and the initial investment.
It can be deduced by two calculations:
- (profit) ÷ (net sales) = return on sales
- (net sales) ÷ (total capital) = capital turnover
from this we determine (return) ÷ (total capital) × 100 = Return on investment
*Please note that this calculation is not taking interest rates into consideration.