Another fundamental financial and business performance measure. This term means different things to different people (often depending on perspective and what isactually being judged) so it's important to clarify understanding ifinterpretation has serious implications. Many business managers and owners use the term in a general sense as a means of assessing the merit of an investment or business decision. 'Return' generally means profit before tax,but clarify this with theperson using the term -profit depends on various circumstances, not least the accounting conventions used in the business. In this sense most CEO's and business owners regard ROI as the ultimate measure of any business or any businessproposition, after all it'swhat most business is aimed at producing - maximum return on investment, otherise you might as well put your money in a bank savings account. Strictly speaking ReturnOn Investment is defined as:
Profits derived as a proportion of and directly attributable to cost or 'book value' of an asset, liability or activity, net of depreciation.
