Month End Glossary

Return on Investment (ROI)

Return on Investment (ROI) is a financial metric used to evaluate the profitability of an investment as a percentage of the original cost.

Return on Investment (ROI) is a widely used metric that measures the gain or loss generated by an investment relative to its cost. It helps individuals and businesses assess the efficiency of their investments. The ROI formula is usually expressed as (Net Profit / Cost of Investment) × 100%, providing a percentage value that represents the return. For example, if you invest $1,000 in a project and earn $1,200 after its completion, the ROI would be (200 / 1,000) × 100%, or 20%. ROI is instrumental in comparing the profitability of different investments or projects, helping stakeholders make informed financial decisions. Additionally, it serves as a benchmark in evaluating the financial success of completed initiatives or forecasting future returns. For businesses using Easy Month End, ROI calculations can support monthly review processes by aligning investment evaluations with accounting and reconciliation activities.

Related Terms

Make your next Month End easy.
Start your free trial today.

Your first Month End free. We’ll import your existing checklist. It’s 2025 - time to get control of your Month End close process!