GLOSSARY
ROI (Return on Investment)
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ROI (Return on Investment) is a measure used to evaluate the efficiency or profitability of an investment. It shows how much return or profit is generated relative to the cost of the investment.
What is ROI?
ROI (Return on Investment) is a metric that helps you assess the profitability of your investments. It shows the ratio of net profit to the initial cost of the investment.
Why it matters for startups
For startup founders, ROI is crucial in determining the success of their investments. It helps in making informed decisions, allocating resources wisely, and evaluating the performance of different initiatives.
Examples
For example, if you invest $1000 in marketing and generate $5000 in sales, your would be 400% (($5000 - $1000) / $1000).
Related Concepts
- Break-even Point: The point at which revenue equals total costs, resulting in zero profit or loss.
- IRR (Internal Rate of Return): A metric used to estimate the profitability of potential investments.