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What is ROI and how do you calculate return on investment?
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Return on investment is one of the quickest ways to compare options using the same baseline: money out, money back in. We tend to shorten the term to ROI, which gives us a quick way to talk about profitability by comparing the gain (or loss) from an investment to its cost. It is usually expressed as a percentage. “For longer-term projects with multi-year cash flows, you usually complement ROI with metrics like NPV or IRR, because timing matters.” Key takeaways
5 min read “Return on investment is one of the quickest ways to compare options using the same baseline: money out, money back in.” It’s often used for short-term decisions like marketing spend, sales initiatives, process changes, or small operational investments. For longer-term projects with multi-year cash flows, you usually complement ROI with metrics like NPV or IRR, because timing matters.
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