Return on Investment (ROI)
ROI (Return on Investment) measures the efficiency of an investment by comparing the gain relative to its cost. It is calculated as:
\[
ROI = \frac{\text{Net Gain from Investment} - \text{Cost of Investment}}{\text{Cost of Investment}} \times 100
\]
Example:
Suppose an initiative costs £500,000 and results in a net gain of £1,200,000.
\[
ROI = \frac{1,200,000 - 500,000}{500,000} \times 100 = \frac{700,000}{500,000} \times 100 = 140\%
\]
This means the investment generated a 140% return over its initial cost.