Question

what does ROI mesures

Answer 1

Return On Investment (ROI):

ROI is a performance measure,the capability of an investment with respect to its net return(final value less initial value) and initial cost can be directly measured by ROI. It is particularly a relation between the profits and capital(invested).The efficiency of the firm in using the investment to generate more profit is reflected by a good(high) ROI,investors will be more inclined with such type of fimrs having good ROI.

ROI Formula = (Net Return / Initial cost of investment ) * 100

(Net Return is calculated by subtracting initial cost of investment from the final value of investment)