ROI (return on investment)

For a given use of money in an enterprise, the ROI (return on investment) is how much profit or cost saving is realized.

For a given use of money in an enterprise, the ROI (return on investment) is how much profit or cost saving is realized. An ROI calculation is sometimes used along with other approaches to develop a business case for a given proposal. The overall ROI for an enterprise is sometimes used as a way to grade how well a company is managed.

If an enterprise has immediate objectives of getting market revenue share, building infrastructure, positioning itself for sale, or other objectives, a return on investment might be measured in terms of meeting one or more of these objectives rather than in immediate profit or cost saving.

This was first published in April 2006

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