Return on Investment (ROI)
Profit made on investment relative to cost.
Formula
ROI = (Net Profit ÷ Investment Cost) × 100
Real World
Nike invested heavily in its Nike Direct e-commerce strategy; by cutting out retailers it earned higher margins per sale, and analysts estimated ROI on that digital investment exceeded 30% within three years.
Exam Focus
Always express ROI as a percentage and compare it to a benchmark (e.g. bank interest rate) to judge whether the investment is worthwhile.
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