Return on Investment Crash Course

Since the dawn of time, we have been interested in knowingthe returns we can get when we invest time or money inanything. It didn't always have a formula to calculate ormeasure the return, but there was the interest of knowingwhat a person will get out of the investment he makes.Whether it is profit or loss in terms of money or returns inkind, knowing that return can be expected makes a venturedesirable. The word "returns" has a very special place inbusiness. Every business venture begins by identifying how theventure will enable the business owner to earn returns fromthe investment they make.Returns on Investment (ROI) is the result of our need to findout what we could earn through an opportunity or a prospect.It compares the costs involved with the benefits that stemthrough the opportunity. It helps the person find out if theywill be able to earn more than the costs that are involvedwhich eventually results in a profit. Everyone is interested inknowing if they will be able to earn more than what theyinvest or spend on a venture.The purpose of Return on Investment is to help businessowners and investors find out if an investment is worthyenough or not. Finding out if the returns will lead to profits ornot can help the person find out whether they should invest ornot. It also works as an indicator which compares variousinvestments in an investor's portfolio. Investments that have thehighest ROI are considered to be priority. It is considered tobe a useful metric for investors as well as marketing leaders.