Are you an EPFL student looking for a semester project?
Work with us on data science and visualisation projects, and deploy your project as an app on top of Graph Search.
Concept
Return on investment
Summary
Return on investment (ROI) or return on costs (ROC) is a ratio between net income (over a period) and investment (costs resulting from an investment of some resources at a point in time). A high ROI means the investment's gains compare favourably to its cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments. In economic terms, it is one way of relating profits to capital invested.
In business, the purpose of the return on investment (ROI) metric is to measure, per period, rates of return on money invested in an economic entity in order to decide whether or not to undertake an investment. It is also used as an indicator to compare different investments within a portfolio. The investment with the largest ROI is usually prioritized, even though the spread of ROI over the time period of an investment should also be taken into account. Recently, the concept has also been applied to scientific funding agencies’ (e.g., National Science Foundation) investments in research of open source hardware and subsequent returns for direct digital replication.
ROI and related metrics provide a snapshot of profitability, adjusted for the size of the investment assets tied up in the enterprise. ROI is often compared to expected (or required) rates of return on money invested. ROI is not time-adjusted (unlike e.g. net present value): most textbooks describe it with a "Year 0" investment and two to three years' income.
Marketing decisions have an obvious potential connection to the numerator of ROI (profits), but these same decisions often influence assets’ usage and capital requirements (for example, receivables and inventories). Marketers should understand the position of their company and the returns expected. For a marketing ROI percentage to be credible, the effects of the marketing program must be isolated from other influences when reported to executives. In a survey of nearly 200 senior marketing managers, 77 percent responded that they found the "return on investment" metric very useful.
Official source
About this result
This page is automatically generated and may contain information that is not correct, complete, up-to-date, or relevant to your search query. The same applies to every other page on this website. Please make sure to verify the information with EPFL's official sources.
Ontological neighbourhood
Related courses (32)
BIO-320: Morphology I
Ce cours est une préparation intensive à l'examen d'entrée en 3ème année de Médecine. Les matières enseignées sont la morphologie macroscopique (anatomie) , microscopique (histologie) de la tête, du c
MGT-482: Principles of finance
The course provides a market-oriented framework for analyzing the major financial decisions made by firms. It provides an introduction to valuation techniques, investment decisions, asset valuation, f
CS-101: Advanced information, computation, communication I
Discrete mathematics is a discipline with applications to almost all areas of study. It provides a set of indispensable tools to computer science in particular. This course reviews (familiar) topics a
Related lectures (137)
General Organization of Alimentary Canal
Explains the structure of the alimentary canal and its different parts.
Abdominal Cavity Organization
Covers the organization of the abdominal cavity and the distinction between intraperitoneal and retroperitoneal structures.
Digestive System Anatomy
Covers the anatomy of the abdomen and digestive system, including histological characteristics.
Related people (16)
Related concepts (7)
Capital budgeting
Capital budgeting in corporate finance, corporate planning and accounting is area of capital management that concerns the planning process used to determine whether an organization's long term capital investments such as new machinery, replacement of machinery, new plants, new products, and research development projects are worth the funding of cash through the firm's capitalization structures (debt, equity or retained earnings). It is the process of allocating resources for major capital, or investment, expenditures.
Rate of return
In finance, return is a profit on an investment. It comprises any change in value of the investment, and/or cash flows (or securities, or other investments) which the investor receives from that investment over a specified time period, such as interest payments, coupons, cash dividends and stock dividends. It may be measured either in absolute terms (e.g., dollars) or as a percentage of the amount invested. The latter is also called the holding period return.
Rate of profit
In economics and finance, the profit rate is the relative profitability of an investment project, a capitalist enterprise or a whole capitalist economy. It is similar to the concept of rate of return on investment. The rate of profit depends on the definition of capital invested. Two measurements of the value of capital exist: capital at historical cost and capital at market value. Historical cost is the original cost of an asset at the time of purchase or payment.
Related MOOCs (5)
Soil and real estate economy
Qu'est-ce qui détermine les prix fonciers et les prix immobiliers en général? Comprenez les liens de ces prix avec les taux d'intérêt, les rentes foncières et les loyers. Un cours d'économie pour les
Soil and real estate economy
Qu'est-ce qui détermine les prix fonciers et les prix immobiliers en général? Comprenez les liens de ces prix avec les taux d'intérêt, les rentes foncières et les loyers. Un cours d'économie pour les
Introduction to Programming in C++
Ce cours initie à la programmation en utilisant le langage C++. Il ne présuppose pas de connaissance préalable. Les aspects plus avancés (programmation orientée objet) sont donnés dans un cours suivan