Glossary · R
Return on Investment (ROI)
Return on Investment
Net benefit relative to investment cost
What it means
Return on investment expresses net benefit as a percentage of investment cost. A common formula is (benefits minus costs) divided by costs, multiplied by 100%. A meaningful comparison states the time period and which costs and benefits are included. Simple ROI does not account for timing or risk.
What it means for a business
For illustration, a project costing PLN 100,000 and producing PLN 150,000 in first-year benefits has a 50% first-year ROI if there are no other costs. Real estimates should include operating costs, implementation effort and uncertainty rather than assume a typical return.