Abbreviation: Return On Investment
1. For a 5-year-old:
Imagine you want a new toy car. You save up your allowance and buy it. ROI is like figuring out if the toy was worth your money! You compare how much you paid (your “investment”) to how much fun you get playing with it (your “return”). If it brings you lots of joy, it’s a good ROI!
2. For a layman:
Think of ROI like a magic money scorecard. When you spend money on something, like a new phone or a gym membership, you want to know if it’s paying off. ROI tells you how much you get back in return for what you put in. If you spend $100 on a phone case that lasts a year, your ROI is better than spending $20 on one that breaks in a month. It’s like making sure your money goes as far as possible!
3. For an expert:
ROI (Return On Investment) is a critical metric in business and finance. It measures the profit generated from an investment compared to the initial cost. A high ROI indicates a successful investment, while a low ROI signals potential losses.