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:
“And the purpose of the many stops and starts will be made clear:
Backing into the old affair of not wanting to grow
Into the night, which becomes a house, a parting of the ways
Taking us far into sleep. A dumb love.”
—John Ashbery (b. 1927)
“Productive collaborations between family and school, therefore, will demand that parents and teachers recognize the critical importance of each other’s participation in the life of the child. This mutuality of knowledge, understanding, and empathy comes not only with a recognition of the child as the central purpose for the collaboration but also with a recognition of the need to maintain roles and relationships with children that are comprehensive, dynamic, and differentiated.”
—Sara Lawrence Lightfoot (20th century)
“Whoever considers morality the main objective of human existence, seems to me like a person who defines the purpose of a clock as not going wrong. The first objective for a clock, is, however, that it does run; not going wrong is an additional regulative function. If not a watch’s greatest accomplishment were not going wrong, unwound watches might be the best.”
—Franz Grillparzer (1791–1872)