# ROI

"Return on investment" is something you can use to measure the effect and profit you can get from an investment. It can also be used to compare the profit you get from different investments to see which one is "best".

ROI tries to measure how much profit you are left with after an investment relative to the investment cost. The calculation is as follows:

The profit or what you are left with after the investment / cost of the investment.

The result / efficiency is shown as a percentage. Let's take an example:

Phil invests 1,000$ in "Johnnys Pizza"

A year later, he sells his shares in the company for 1,200$

His ROI or "return on investment" will then be:

(1200-1000) / 1000$ = 20%