Return on investment (ROI) is a financial metric used to evaluate the profitability or efficiency of an investment relative to its cost. ROI measures the return or gain generated from an investment, expressed as a percentage of the initial investment amount. The ROI formula is calculated by subtracting the initial investment cost from the final investment value (or net profit), dividing the result by the initial investment cost, and multiplying by 100 to express the result as a percentage. ROI = ((Net Profit / Initial Investment) * 100). A higher ROI indicates a more profitable investment, while a negative ROI signifies a loss. ROI is a fundamental performance measure used by investors, businesses, and analysts to assess the effectiveness of capital allocation, compare investment opportunities, and prioritize resource allocation decisions. ROI analysis helps stakeholders evaluate the risk-adjusted returns of different investments, identify underperforming assets or projects, and optimize portfolio strategies to maximize returns and minimize risk. ROI considerations are crucial for decision-making in areas such as capital budgeting, project evaluation, marketing campaigns, research and development initiatives, and strategic investments, guiding organizations in achieving their financial objectives and creating long-term shareholder value.