Return on investment is basically the ratio of appropriate profit or loss which is been made in the fiscal year in terms of a certain investment. The return on investment is bee viewed in reference to the percentage of hike and downfall in the value of the certain investment been done during the year.
Suppose you have made an investment of $100 in share stock and after a certain duration its value hikes to $110 by the end of the depicted duration. The return on the investment is a simple 10%, assuming no dividends were paid.
Primary formula for calculating Return on investment
So, in the above formula the “Gain from investments” refers to the proceeds or you can say profit made by the sale of investment of interest. As Return on investment is been measured in reference to the percentage the comparison could be made easily compared to other investments as it allows to measure variant types of investments to an individual.
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