Understanding the concept
What is ROI?
ROI stands for Return on Investment. It measures how much you earned relative to how much you spent — expressed as a percentage. It is the simplest way to evaluate whether any business spend was worth it — a marketing campaign, a machine, a software subscription, a new hire, or any capital deployment. The higher the ROI, the more efficiently your money worked for you.
ROI %
=
( Final Value − Initial Investment ) ÷ Initial Investment × 100
✅
ROI of 50% — Good
For every ₹100 you invested, you got back ₹150 — a ₹50 profit. Your money grew by 50%.
❌
ROI of −20% — Loss
For every ₹100 you invested, you only got back ₹80 — you lost ₹20. The spend did not pay off.
Benchmark to beat: A bank FD gives ~7% per year. Any business investment should target at least 15–20% ROI to justify the risk. Below 7% means your money was better off in a fixed deposit.