Return on Investment (ROI)

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A profitability measure that evaluates the performance of a business by dividing net profit by net worth

 
BusinessDictionary

The earning power of assets measured as the ratio of the net income (profit less depreciation) to the average capital employed (or equity capital) in a company or project. Expressed usually as a percentage, return on investment is a measure of profitability that indicates whether or not a company is using its resources in an efficient manner. For example, if the long-term return on investment of a company is lower than its cost-of-capital, then the company will be better off by liquidating its assets and depositing the proceeds in a bank. Also called rate of return, or yield.

 

see SROI Network’s Guide to Social Return on Investment

 

 

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