The calculation of return on investment (ROI) in business is one of the most important calculations that the company performs. This calculation allows companies to determine the turnover received from investing a certain amount of money and resources.
For example, if ABC Company invested $ 100,000 in an advertising campaign to promote a new service. ABC Company received 150 calls from the campaign and 50 of the callers bought the new service. The volume of new business sold was $ 500,000. Equation for calculating the ROI is the same: (ROI – investment) / investment (100).
The first bit of information that must be to calculate the ROI is the return on investment. In this example, the return is $ 500,000. Next, you need to know which the initial investment was. In this scenario, the company invested $ 100,000 in ABC’s marketing campaign. Now is the time to establish the equation. ROI = ($ 500,000 – $ 100.000) divided by $ 100,000 multiplied by 100. Once you have the equation you can calculate the ROI. In this case the answer is 400%, which means that the ABC has a 400% return on your investment.