Business, Legal & Accounting Glossary

Definition: ROI


Quick Summary of ROI

Net value of a specific asset divided by the amount of capital invested in that asset. ROI is also a general way of referring to the overall value of any effort or campaign, in the sense of whether or not the effort was “worth it.”

What is the dictionary definition of ROI?

Dictionary Definition

corporate finance The amount, expressed as a percentage, that is earned on a company’s total capital calculated by dividing the total capital into earnings before interest, taxes, or dividends are paid.

Full Definition of ROI

ROI, or return on investment, is a measurement of performance used to compare the effectiveness of different investments.

ROI is calculated by taking the benefit, or return, from an investment and dividing it by the cost of the investment. R

OI is expressed as a percentage or a ratio. ROI is popular because of its versatility and simplicity and may be modified for different situations.

In different contexts, ROI takes several meanings. ROI for a company can be one way to measure of the effectiveness of management, a measure of profits, of cost savings, or of a company’s ability to earn using its assets (in this case, ROI is calculated as net after-tax profits divided by total assets). ROI may also be used in justifying a project or proposal, based on projected profits from the project and its estimated costs. Sometimes ROI is used to measure returns from efforts to gain market share, enter new markets, or develop infrastructure; in these cases, ROI may be used to measure how effectively an objective was met.

By comparing the ROI of different potential projects, a determination on which project to undertake may be made. Also, if an investment does not have a positive ROI or other investments have higher ROI, the investment should not be made. If not careful, ROI calculations may be manipulated to suit the needs of the user, or project manager.

Examples of ROI in a sentence

The ad campaign cost over two thousand dollars but generated only five hundred dollars in new sales, so there was not a good return on investment.
The budget office spent two months studying the return on investment figures from similar projects before sending their recommendations to the Board.

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
ROI. Payroll & Accounting Heaven Ltd.
April 18, 2024
Chicago Manual of Style (CMS):
ROI. Payroll & Accounting Heaven Ltd. (accessed: April 18, 2024).
American Psychological Association (APA):
ROI. Retrieved April 18, 2024
, from website:

Definition Sources

Definitions for ROI are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 15th February, 2020 | 0 Views.