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How to calculate return of investment?
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[QUOTE="Jasz, post: 223044, member: 61772"] ROI stands for return on investment, and as the name suggests, it's a way to measure whether you're getting a good return on your investment. Basically, it's the amount of money you get back when you subtract what you put into something from what that something makes. It's important to think about ROI because it helps you make smart decisions about where to put your money. If an investment is going to cost more than it makes, then the answer is simple: don't do it. But if you can see that an investment will bring in more than it costs, then it's probably worth doing. Return on investment (ROI) is a key metric for any business that needs to see how the money it has invested—in, say, marketing and advertising—is paying off. Return on investment lets you know whether your investment has paid off. There are two ways to calculate ROI: simple and advanced. To calculate simple ROI, you take the profit of your investment minus the cost of your investment, divided by the cost of your investment. Simple ROI = (profit – cost) / cost For example, let's say you spend $5,000 on Facebook ads in a year. In that same year, you sell 100 widgets at $75 each for a total of $7,500 in revenue. The profit from those sales is therefore $2,500 ($7,500 - $5,000), so the profit from Facebook ads is $2,500. Therefore: Simple ROI = ($2,500 - $5,000)/$5,000 = -50% [/QUOTE]
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