What is Return on Investment?
Net return relative to the amount invested.
How to calculate it
Calculate Return on Investment as: (Gain − Cost) / Cost × 100. Pull the inputs from your connected data and track the trend over time in your dashboard.
Examples
Example 1
Invest $50k in a tool that yields $120k of value -> (120-50)/50 = 140% ROI.
Example 2
A $50k investment in automation yields $120k of value -> 140% ROI, well above the cost of capital and an easy approval.
Why it matters
Return on investment (ROI) is the net return relative to the amount invested and is the universal yardstick for evaluating investment decisions. It allows very different opportunities to be compared on a common basis. Because it ignores the time value of money and risk, it should be paired with payback period or a discounted measure for big decisions.
Benchmark context
The bar is a return above your cost of capital; the right hurdle rate depends on risk, with riskier investments requiring higher ROI.
Common pitfalls
Ignoring time value and risk.
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