FULL FORM OF ROI

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WHAT IS ROI

      ROI stand for Return on Investment. It can be defined as ROI measures the profit or loss earned on an investment related to the amount of money invested. ROI is usually expressed in the form of percentage and basically used for personal financial decisions,to compare a company's profitability or to compare the efficiency of returns on different investments.

HOW ROI IS CALCULATED

     The ROI is calculated with the following formula --

 ROI =       Net Profit
                  ___________         x  100
                 Cost of investment
     
A company may use the calculation to compare the ROI on different potential investments, while an investor can use ROI to calculate a return on stock.

  Calculation of ROI can be understood with the followings examples --

 An investor buys stocks of total amount Rs 5000/. He holds of stock for two year and after that he sold it for the Rs 6500/. So the net profit would be Rs 1500/ and ROI will be calculated as--

  ROI =      1500
                  --------- x100
                 5000
           =   30%
       Hence Return on capital will be 30%
 To get the exact return on capital the brokerage,taxes and other given charges will be deducted from the profit amount.
   

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