Return On Investment
What is the ROI? Return on Investment (ROI) directly measures the amount of return on a particular investment, relative to the investment’s cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.
Why is ROI important? Calculating ROI helps you understand what's working and not working in your business so you can make changes. If your PPC ad isn't generating a profit, then you're losing money. Knowing that would then prompt you to either change the ad to improve ROI or ditch it altogether. The goal is to have a high ROI.
Challenges when calculating your ROI: The difficulty in calculating ROI lies in how well revenues (what you earn) are with a specific investment. For example, if you engage in a free promotional activity that results in increased sales, the denominator would be zero, which results in a mathematical error.
What is the ROI formula? ROI = Net Profit / Total Investment x 100. However, shareholders would use the ROI of their stock holding by using this formula: ROI = Net Income + (Current Value - Original Value) / Original Value x 100.
Why do people use ROI? Simply put, it gives you an understanding of how successful nearly any investment in your business has been, whether that's hiring new staff, creating a new department or purchasing new software or factory equipment. Check below to see Capital Filtrations Inc ROI.
The bottom line to any business is seeing your money at work for you. With the right products, you can see your investments last longer and with fewer maintenance costs out of pocket. That means more profits in the bank.