Return On Investment
GROSS PROFIT - EXPENSES = NET PROFIT = NET PROFIT / INVESTMENT × 100%
Things to Be Considered In
INVESTMENT
|Paid-Up-Stocks |Closing Stocks |Claims |Credit in Market |Damages |Goods in Transit |Balance Amount with Companies|
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EXPENSES
|Office Expenses |Salary to Staff, Salesman-Delivery Man & Helper |Electric-Telephone-Internet Bill Cost |Stationery | Maintenance & Vehicle Depreciation | Bank Charges | Cash Discounts |Godown Rent |Misc.... Exp|
Why is ROI Important?
Performance Measurement: It helps evaluate how well an investment has performed.
Comparison: ROI allows for an "apples-to-apples" comparison between different investment opportunities, such as stocks, real estate, or marketing campaigns.
Decision Making: Businesses use projected ROI to decide whether a project makes sense to pursue and to allocate resources strategically.
Accountability: It helps justify spending on specific programs or campaigns by quantifying the revenue generated.
A positive ROI means the investment was profitable, while a negative ROI means you incurred a loss.