Return on investment
ROI / ROI
Return on investment is a ratio that compares a net gain or benefit with the cost or capital used to produce it, usually expressed as a percentage.
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Simply put
What it means in ordinary work
It shows how much return an investment generates relative to its cost. The definition of gain and cost must be stated or the number can mean very different things.
Why it matters
ROI is simple to communicate and useful for comparing options within a consistent framework. It is less suitable when benefits are uncertain or occur over different periods.
A hypothetical in practice
A hypothetical automation project costs 100,000 units of currency and is expected to produce 30,000 of annual net benefit over four years. The team presents both the simple cumulative ratio and a discounted cash-flow view.
Common pitfalls
Ignoring timing makes high future benefits look equivalent to immediate ones. Pair ROI with present-value analysis for long projects.
Excluding operating costs or staff time can overstate the return.
Scope and limits
Simple percentage formula: (net benefit divided by investment cost) multiplied by 100. Specify the time period, cost base and whether benefits are cash or non-cash.
Regional lens
How this lands where you work
The global explanation is canonical. Regional notes are additive, separately sourced and shown with their own review state. They never replace the global meaning.
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As-of date for date-sensitive regional content: 5 November 2026. Read the review policy.