What does roi mean?

What is ROI? I believe that foreign trade merchants who have just come into contact with e-commerce will feel confused at first sight and have a little knowledge of all kinds of information. Therefore, Bian Xiao will explain what today's return on investment means to everyone.

What is ROI?

ROI: ReturnOnInvestment。 It refers to the economic return of an enterprise's investment in an investment operation activity, is a ratio used to measure the profitability of an enterprise, and is a comprehensive index to measure the operating effect and efficiency of an enterprise.

Return on investment (ROI)= annual profit or average annual profit/total investment × 100%. As can be seen from the formula, enterprises can improve the return on investment by "reducing sales costs, improving profit margins and improving asset utilization efficiency". The advantage of return on investment (ROI) lies in its simple calculation. Return on investment (ROI) is usually time-sensitive-the return is usually based on a specific year.

ROI can measure one-time investment and business activities as well as monthly or annual investment income. It is not an absolutely fixed concept, but changes with the specific investment and business activities.

Give a few examples. In the securities industry, if you buy stocks with 6.5438+0.5 million yuan, you will get 6.5438+0.5 million yuan after all the shares are sold, and the return on investment is ROI = (654.38+0.5 million-6.5438+0.00 million)/6.5438+0.00 million =50%. In the property industry, if the property acquired with an investment of 1 10,000 yuan is rented at the price of 1 10,000 yuan per month, the monthly return on investment of this investment is (1 10,000/10,000) * 100% = 1%.

The rate of return on investment can reflect the comprehensive profitability of investment centers, and it has horizontal comparability because it eliminates the incomparable factors of profit difference caused by different investment amounts, which is conducive to judging the operating performance of each investment center. In addition, the return on investment can be used as the basis for choosing investment opportunities, which is conducive to optimizing resource allocation. But the deficiency of this evaluation index is the lack of overall concept.