What is ROI and why is it important?
ROI stands for “Return on Investment”. This is a simple calculation that compares the profitability of different investment opportunities. To calculate this, divide your total profit by the amount of your initial investment. ROI’s are typically annualized so the amount to reflect returns if less than a full year. For example, if your initial investment was $10,000.00 and you received $1000.00 in profit after one year, ROI = $1000/$10,000 = 10%. If you accomplished that same $1000 in 6 months, your effective ROI is actually 20% (annualized).
