return on investment (ROI)
Definition
Earning power of assets measured as the ratio of the net income (profit less depreciation) to the average capital employed (or equity capital) in a firm or project. Expressed usually as a percentage, it is a measure of the profitability which (while not taking the time value of money into account) indicates whether or not a firm is using its resources in an efficient manner. For example, if the ROI of a firm (in the long run) is lower than its cost-of-capital then the firm will be better off by liquidating its assets and depositing the proceeds in a bank. Also called rate of return, or yield.
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return on investment (ROI) is in the Accounting & Auditing, Banking, Commerce & Finance and Investing subjects.
return on investment (ROI) appears in the definitions of the following terms: du pont formula, capital investment analysis, investment center, profit, rate of return, investment and key performance indicators (KPI)
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