Return on Investment (ROI)

byPaytm Editorial TeamOctober 16, 2025

Meaning

Understanding an investment’s effectiveness is crucial for informed decisions.

Definition

ROI (Return on Investment) is a performance metric evaluating an investment’s efficiency. It measures the benefit an investor receives relative to their initial investment cost.

Calculation

ROI is calculated as: (Net Profit / Cost of Investment) x 100. This formula expresses the return as a percentage.

Significance

ROI helps assess profitability, compare different investment opportunities, and guide better financial choices for businesses and individuals.

Author

Paytm Editorial Team

The Paytm Editorial Team is a collaborative group of writers, editors, and industry experts. We're dedicated to bringing you the latest insights, news, and guides on digital payments, financial services, and the technology that's shaping India's economy. We offer easy-to-follow guides and insights to help you explore Paytm’s products, features, and services. Our goal is to provide clear, reliable, and helpful information to empower you on your financial journey.