In financial terms, what does ROI stand for?

ROI commonly stands for Return on Investment, which is a key financial metric used to evaluate the efficiency or profitability of an investment. It measures the amount of return relative to the investment cost. The formula for ROI is typically expressed as:

[ \text{ROI} = \frac{\text{Net Profit}}{\text{Cost of Investment}} \times 100 ]

This calculation provides insights into how well an investment is performing. A positive ROI indicates that the investment has earned more than it cost, while a negative ROI indicates a loss.

Understanding ROI is essential for making informed decisions in both personal finance and business management. Investors and managers rely on ROI to compare the profitability of different investments or projects, ensuring they allocate resources to the most advantageous options. It effectively helps in assessing the financial viability and success of investments, making it a critical concept in the context of Economics and Management.

The other options, while seemingly related to financial concepts, do not accurately define ROI. For instance, Rate of Interest pertains to the cost of borrowing or the return on savings but does not encapsulate the broader definition of ROI. Revenue over Input and Ratio of Output and Input are not recognized financial terms that specifically address the assessment of investment returns.