ROI (Return of Investment) is a data showing the return and return of the investment made. It is expressed in Turkish as “Return on Investment”.
What is ROI (Return of Investment)?
Return on investment, also known as ROI, is basically a process used to evaluate the efficiency of the investment. This transaction, which can be done not only for a single investment, but also for more than one investment, is also used to make a comparison between investments with this feature. ROI has become a term that is frequently encountered in the e-commerce world with the transfer of investments to digital.
As in traditional commerce, ROI (Return of Investment) metric is vital in the investment analysis process in e-commerce. Since the highest ROI calculation result of an initiative is targeted, it is basically aimed to reduce the risks. The ROI evaluation, which contributes to the proliferation of investments, is a process used by many organizations to progress by calculating returns and find solutions related to the digital field as an application area.
ROI (Return of Investment) is a widely used financial metric to calculate the amount of profit from an investment. It is a method that is valid in all known investment channels. It is used to evaluate the sustainability of an investment by measuring the numerical return and efficiency of an investment with its ROI (Return of Investment) value. ROI (Return of Investment) enables individual or institutional investors to plan their moves by proportioning the investment profit to the cost.
The choice of an investment asset or channel among investment types on the same scale depends on this calculation result. It is profitable to have a higher ROI than others; A lower value indicates that it is harmful. Investors shape their investment plans with the results they obtain from these numerical data. ROI (Return of Investment) is a calculation method that should be done regularly.
How is ROI (Return of Investment) Calculated?
There are elements that are based on when calculating ROI. First of all, it is necessary to determine the net cost. Net cost; It is the sum of the purchase price of the asset or fund to be invested and the financing and cost transactions. Next, it is necessary to determine the net profit. For this, the net cost value is subtracted from the value of the invested asset or fund after the investment. The commonly used ROI (Return of Investment) equation is as follows;
ROI = (Revenue – (Investment Expense + Product Cost)) / (Investment Expense + Product Cost)
