Purpose
In business, the purpose of the "return on investment" metric is to measure, per period, rates of return on money invested in an economic entity in order to decide whether or not to undertake an investment.
ROI and related metrics provide a snapshot of profitability, adjusted for the size of the investment assets tied up in the enterprise. ROI is often compared to expected (or required) rates of return on money invested.
Marketing decisions have obvious potential connection to the numerator of ROI (profits), but these same decisions often influence assets usage and capital requirements (for example, receivables and inventories). Marketers should understand the position of their company and the returns expected.
In a survey of nearly 200 senior marketing managers, 77 percent responded that they found the "return on investment" metric very useful.
Return on investment may be calculated in terms other than financial gain. For example, social return on investment (SROI) is a principles-based method for measuring extra-financial value (i.e., environmental and social value not currently reflected in conventional financial accounts) relative to resources invested. It can be used by any entity to evaluate impact on stakeholders, identify ways to improve performance, and enhance the performance of investments.
Read more about this topic: Return On Investment
Famous quotes containing the word purpose:
“Man, her last work, who seemed so fair,
Such splendid purpose in his eyes,
Who rolled the psalm to wintry skies,
Who built him fanes of fruitless prayer,
Who trusted God was love indeed
And love Creation’s final law—
Though Nature, red in tooth and claw
With ravine, shrieked against his creed—”
—Alfred Tennyson (1809–1892)
“But this fully answered John’s purpose toward Betty, for as she did not understand, she highly admired him; and he concluded by again repeating that learning was a fine thing for a man but ‘twas both useless and blameworthy for a woman either to write or read.”
—Sarah Fielding (1710–1768)
“Language, the machine of the poet, is best fitted for his purpose in its rudest state. Nations, like individuals, first perceive, and then abstract. They advance from particular images to general terms. Hence the vocabulary of an enlightened society is philosophical, that of a half-civilised people is poetical.”
—Thomas Babington Macaulay (1800–1859)