Financial Reporting
ROI (Return on Investment)
The percentage return on a specific investment, measuring profitability relative to cost.
Formula
ROI (%) = ((Gain - Cost) / Cost) × 100What is ROI?
Return on Investment measures the profitability of an investment as a percentage of the original cost. Unlike ROAS (which measures revenue), ROI measures actual profit.
ROI vs. ROAS
- ROAS = Revenue / Ad Spend (doesn't account for COGS or other costs)
- ROI = (Profit - Investment) / Investment (accounts for all costs)
A campaign with 5x ROAS might have only 50% ROI after accounting for product costs, shipping, and fees.
Example
You invest $5,000 in a marketing campaign. It generates $12,000 in profit. ROI = (($12,000 - $5,000) / $5,000) × 100 = 140%.
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