Return on Investment
Return on Investment (ROI) is an accounting valuation method. It is the ratio of money gained or lost to the amount of money invested. Although it is considered unreliable, it is still used annually on many return reports. It is a performance measure used to evaluate the efficiency of an investment. It can also be used to compare the results of a number of different investments. It is a simple calculation and if the investment has a negative ROI, or if similar opportunities have a higher ROI, then it stands to reason that the investment should be avoided.

However, the calculation for return on investment can be easily modified as it depends on what you include as returns and costs. It is an attempt to measure the profitability of an investment and as such there is no determinable set calculation. It is so flexible that it can be easily manipulated and the return can be shown in many different ways. It is therefore necessary to understand exactly what the inputted amounts stand for in order to understand what the return results mean. There are more accurate ways to measure the exact returns on an investment.

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