What is ROI? A comprehensive guide to understanding the calculation method and practical application of return on investment

2025-12-24 21:07:44

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Return on Investment (ROI) is one of the most concerned financial indicators for investors, intuitively reflecting how much return your capital investment can bring. Whether it’s stocks, forex, Crypto, or advertising, ROI is an important yardstick for evaluating whether an investment decision is correct. This article will delve into the core concepts of ROI, calculation methods, and practical applications.

What is the essence of ROI

Return on Investment (ROI) is a key indicator to measure investment efficiency, used to calculate the profit gained from the investment as a percentage of the initial investment. In simple terms, the higher the ROI, the better your capital utilization efficiency.

ROI is widely used in personal financial decisions, company performance evaluation, and cross-comparison of different investment types. Whether in traditional financial markets or emerging markets, mastering the ROI calculation method can help investors make more rational decisions.

How to calculate Return on Investment: formulas and principles

The logic of calculating ROI is very straightforward—net profit divided by initial investment, then multiplied by 100% to get a percentage.

Basic calculation formula

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