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The full form of ROI is Return on Investment. It is a powerful metric used to measure the profitability of an investment by calculating its monetary value versus its overall cost. A positive ROI indicates profitable investment while on the other hand, a negative ROI indicates loss or negative value. It is used by all small and big businesses to assess the potential profitability of any particular investment.
Also Read: What is IPO Full Form?
How to Calculate ROI?
ROI is expressed as a percentage. To calculate it, all you have to do is divide the net profit or loss of an investment by its initial cost or outlay.
ROI = current value of investment – cost of investment/cost of investment
Also Read: What is the Full Form of POC
Features of ROI
The features of ROI include:
- It gives insights into the profitability of different potential investment options.
- ROI can help you prioritize investment options based on their expected results.
- It can help you identify more such related investments that might end up being a great decision for your business.
Also Read: What is the Full Form of GIC?
What are the Limitations of ROI?
The limitations of ROI include:
- It focuses on monetary gains and ignores qualitative benefits such as increased brand awareness and employee satisfaction.
- ROI takes into account short-term or immediate benefits and thus, ignores long-term profits.
- It does not make the person aware of potential risks associated with the investment.
- ROI can make comparisons tricky as it does not consider the total time invested or delays in between.
Popular Full Forms
We hope this blog has helped you understand the full forms of ROI and everything related to it. If you want to know more, find the general full form list on our blog. In the world of short forms, you can rely on the Leverage edu page to know about more full forms like this! Connect with us study abroad experts to achieve your international dream today!