ROI: what it is and how to calculate return on investment

From budget allocation to choosing which initiatives to pursue, from launching new products to expanding into new markets, not to mention evaluating a new marketing campaign or SEO spend. ROI is the common thread that ensures consistency and direction to every company’s strategies because it gives us a clear view of the economic impact of our decisions. In a world where every penny counts, having a solid understanding of what ROI is and how to calculate it effectively means being in control of the business rudder and sailing into more profitable waters.

What is ROI, Return On Investment

ROI stands for Return On Investment, which can be translated into Italian as “return on investment.”

ROI is a financial indicator that measures the effectiveness of an investment because it indicates the ratio of the gain achieved to the expenditure served for the purpose. That is, it tells us in absolute terms how much value was generated for a certain amount of resources expended.

In essence, ROI is a key metric for evaluating the effectiveness of an expenditure or investment made, because it is used to understand whether or not an investment has produced a return relative to the expenditure incurred to make it.

In simple terms, ROI measures the efficiency of an investment by comparing the return achieved with the capital employed. It is a concept that resonates through boardrooms and offices around the world because it offers a clear, quantifiable answer to the fundamental question, “How much am I making from this investment?”

Meaning of ROI and return on investment

When we talk about ROI, we get to the heart of business strategy, since it is this indicator that drives investment decisions, large and small, and provides a clear ind