Financecalendar_todayLast updated: Apr 2026
What is Return on Investment?
/rɪˈtɜːn ɒn ɪnˈvɛstmənt/
Return on Investment (ROI) measures how much profit or loss an investment generates relative to its cost, expressed as a percentage. It is one of the most widely used metrics to evaluate financial decisions.
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Everyday Example
If you spend £500 on a course and it leads to a job paying £5,000 more per year, your ROI in year one is 900%.
publicReal-World Application
“Companies routinely reject marketing campaigns with an ROI below a threshold — if every £1 spent in ads doesn't return at least £2 in sales, they pull the budget.”
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Did you know?
ROI was first formalised as a business metric by DuPont in 1914 and became a standard tool for comparing disparate investments.
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Key Insight
ROI ignores the time dimension — 100% return over 10 years is far less impressive than 100% return over 1 year. Use it alongside time-aware measures like CAGR.
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