What is the Full Form of ROI?

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. 

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