Talk:Return on investment

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The content of this article has been derived in whole or part from Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein

(2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. Upper Saddle River, New Jersey: Pearson Education, Inc. ISBN 0137058292.. Permission has been received from the copyright holder to release this material under both the Creative Commons Attribution-ShareAlike 3.0 Unported license and the GNU Free Documentation License. You may use either or both licenses. Evidence of this has been confirmed and stored by VRT volunteers, under ticket number 2012021110008071. Permission applies only to such content from this book as is already present in the article on May 1, 2012. See item #45 in the OTRS records

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Wiki Education Foundation-supported course assignment

This article is or was the subject of a Wiki Education Foundation-supported course assignment. Further details are available on the course page. Student editor(s): Yeexyc.

Above undated message substituted from Template:Dashboard.wikiedu.org assignment by PrimeBOT (talk) 08:06, 17 January 2022 (UTC)[reply]

This page already exists

Someone please make this page redirect to rate of return instead, and optionally merge the content. I don't know what term is more common "return on investment" or "rate of return", so a rename is perhaps a good idea also after researching this. (Sorry for not being able to do these changes myself).

Rate of Investment is more common parlance in UK project management. Added reference in "See Also" list.ComplyAnt (talk) —Preceding undated comment added 11:36, 8 January 2013 (UTC)[reply]

Return on investment and return are different things. Formula for return does not include investment. — Preceding unsigned comment added by 172.103.152.247 (talk) 22:37, 6 June 2020 (UTC)[reply]

Discussion

I would like to start a Return on Investment discussion on this Talk page. Interested readers who have comments on this should pick the following topics and post.

ROI on Software Development; ROI on Training; ROI on Testing; ROI on Localization; ROI on Marketing;

If I can be of assistance in answering any questions or comments - just let me know.

Vijay Sikka | San Jose

Cleaned up the article a bit to: add external reference to non-marketing definition; removed US bias ($ changed to "money") and put content under relevant sections. ComplyAnt (talk) —Preceding undated comment added 11:39, 8 January 2013 (UTC)[reply]

Calculating ROI

I would like to calculate the ROI for my company. Can anybody help me? I need to take into account present and future value

'Returns'

Returns used to redirect here; I've now changed it to redirect to Returns (disambiguation), which includes this page. Hope that's ok.

Poker

I removed this:

ROI is also commonly being used by semi-pro poker players. Poker players are keeping track of their ROI to see if their time is being aptly profitable. For instance, I've cashed in 7 of my last 16 $6 3-table NL SNG's on Party. They pay top 5 out of 30. I have two 2nd place cashes, two 3rd place cashes, two 4th place cashes, and one 5th place cash. I have cashed $195 over these 16 tournaments. Since I've spent, or invested, $96, and my profit is $99, that means that my ROI is 103%. MY ITM (In the money) is 43% which is phenomenal when you consider that only 1-in-6 finishes in the money. Once my bankroll hits $300, I'll probably jump up to $11 tournaments, where the same ROI (hopefully) will yield me twice what it does at this level. In a couple years I'll probably be dominating the $1K tournaments with an ROI of 100% and therefore pocketing $1K for about 2 hours of work, while watching TV at the same time.

ROI is in fact often used by tournament poker players. But this needs to be rewritten entirely. There is no "I" on Wikipedia. Any volunteers to rewrite the paragraph? - furrykef (Talk at me) 7 July 2005 10:55 (UTC)

Error in calculation

Return on investment (%) = Net profit ($) / Investment ($) * 100 %

The equation above implies incorrectly that you are to multiply by 1.00 — Preceding unsigned comment added by Ragaar (talk • contribs) 15:26, 18 July 2012 (UTC)[reply]

The factor of 100% is there to help the mathematically illiterate convert things to percentages. --98.203.241.55 (talk) 19:11, 17 January 2013 (UTC)[reply]

Further to this topic...

The formula

(1) return on investment = (gain from investment – cost of investment) / cost of investment

is at best unclear, and should either be recast as

(2) return on investment = gain from investment / cost of investment,

or the term 'gain from investment' should be defined (in such a way, I would suggest, as to fly in the face of normal usage of the word 'gain').

Example: Say I buy something for $1 (the cost of investment) and after some time sell it for $1.10, then I would say that I have gained $0.10 (this is the gain from investment and consistent with normal English usage). The ROI is 10% according to (2). However, following (1) we would find

ROI = (0.1 - 1.0)/1.0 = -90% ! — Preceding unsigned comment added by 121.44.13.21 (talk) 00:49, 29 March 2015 (UTC)[reply]

Merge Pages?

I'm confused that Return on investment and Return on Investment both exist. Should these pages be merged together? --98.203.241.55 (talk) 19:10, 17 January 2013 (UTC)[reply]

"Example" section

Recently there have been repeated edits by IP user 70.81.235.50, who created a tutorial-style "Example" section; those edits were reverted by other users. Such a section violates WP:NOTHOWTO and would do so even if it were properly sourced.

The edit summary of one reversion asked the IP user to discuss the issue on the article's talk page, which the IP user has not done yet, but perhaps that person will read the talk page. The edit summaries of other reversions explained that the IP user's edits violated Wikipedia:Core content policies regarding WP:POV, WP:OR, and a reliable, published source. The IP user's edits included calculations that do not qualify as routine calculations, which are further explained in this essay. The IP user's edits also violated WP:EDITWARRING. --Rich Janis (talk) 16:21, 21 July 2014 (UTC)[reply]

The editor in question, 70.81.235.50, has been repeatedly warned that the material is original research and asked to discuss the issue, both in edit summaries (here and on two other articles) and on their talk page. Having ignored those requests repeatedly, they are currently on their second block. It's not going well. - SummerPhD (talk) 17:27, 21 July 2014 (UTC)[reply]

How are return on investment and earnings yield related?

I feel this article should mention earnings yield somewhere.Golopotw (talk) 12:14, 31 January 2018 (UTC)[reply]

Only initial investment or all costs?

Does investment amount include only initial investment or initial investment plus further expenses? Let us assume a cash purchase of a residence for $100,000. The house is held for 10 years and is then sold for $150,000; during its 10 years of ownership, maintenance costs have been $1,000 per year. What is ROI in this example? 1) (150,000-100,000-10,000)/(100,000+10,000)x100% = 36.36% or 2) (150,000-100,000-10,000)/(100,000) = 40%

Does return include only cashflows or non-cash incomes and expenses also? Is return the same as net income or net cashflow?

There are non-cash incomes (recorded shipment of goods even though payment has not been received) and non-cash expenses (depreciation of a vehicle). If return is based on incomes and expenses and not on cashflow, then it seems to be the same as net income (incomes minus expenses). If return is based on cashflow, then it is different from net income but is equal to net cashflow.