Question

What is an ROI and what is its key interrelationships with rations. (Also please give me an example of the relationship works) Please be thorough in your explanation

Answer 1

ROI refers to return on Investment.

Every individual makes an investment in expectation of certain return out the investment. That very return is described as ROI.

For example, I invest in 10 Share of $ 500 each. Hence, I made an investment of $ 5000.After a month, I decided to sell the share. Now the value of a share has moved from $ 500 to $ 600. Hence, After the month, I received $ 6000. Hence, my return on investment would be as follows :

ROI = Final Return of Investment – Initial Investment/Initial Investment

= 6000 – 5000/5000 = 1000/5000 = 20%

Hence,my ROI is 20%