What does ROI of 1.5 mean?

An ROI (Return on Investment) of 1.5 means that for every unit of currency invested, you earn 1.5 units back. This is a way to measure the profitability of an investment. Here’s how to interpret it:

• Calculation: ROI is typically calculated using the formula:

ROI=Net Profit /Cost of Investment x100

For example, if you invest ₹1,00,000 in a project and earn ₹1,50,000 after a year, your net profit is ₹50,000. The ROI would be:

ROI=₹50,000/₹1,00,000 x 100=50%

• Understanding 1.5: An ROI of 1.5 indicates a 50% profit on your investment. This means you not only recouped your initial investment but also made an additional profit equal to 50% of that investment.
• Investment Decisions: A higher ROI is generally more favourable, as it indicates better performance. Investors often compare ROIs across different investments to determine where to allocate their resources.

Understanding ROI helps investors make informed decisions about where to invest their money for the best returns. You may use the ROI Calculator to simulate different numbers and understand the kind of returns you get on your investments.