Definition - What does Return on Investment mean?
Return On Investment (ROI) is a financial measurement used to determine the size of the loss or gains on a financial outlay. It is a ratio between the net profit or loss earned and the outlay of the investment expressed as a percentage value. Return on Investment is used to evaluate investment performance in order to make an informed choice when selecting an investment.
SureHire explains Return on Investment
Return on Investment (ROI) is calculated by determining the net profit and dividing this amount by the total amount invested and multiplying this by one hundred. In the context of employee health programs, the net profit or loss is brought about by the resulting decrease in employee sick days and the cost-savings in medical expenses. The return on investment is then determined by measuring the value of a decrease in sick days or the savings in medical costs and expressing this as a percentage of the outlay made for the employee health programs.
