Just because it says “Return on Investment,” doesn’t mean it’s the profit!  Remember that.

ROI is the percentage you gained after investing capital (money and other forms) in a profit-driven venture.

For example, you invested $500 in a pizza business. By the end of the month, your total sales are $800. Your profit is $300. To convert it into percentage: ($300/$500) x 100 = 60%. Your ROI is 60%.

The result in percentage is preferred because it would be easier to compare it with other ROIs in different situations.

Other interesting terms…