What is the formula for calculating Return on Investment (ROI)?

The formula for calculating Return on Investment (ROI) is indeed represented as the ratio of Net Profit to the Cost of Investment, multiplied by 100 to express it as a percentage. This method provides a clear indication of how effectively an investment is generating profit relative to its initial cost.

By using this formula, investors can gauge the profitability of an investment, allowing them to compare different opportunities more easily. A higher ROI percentage indicates a more profitable investment, while a lower ROI suggests less efficiency. This formula is widely utilized in financial analysis to assess the performance of investments, making it a vital tool in business finance.

The other choices suggest different financial ratios that do not pertain directly to the calculation of ROI. For example, the first option looks at revenue against expenses, which does not focus on the profit from a specific investment. The third option measures net income relative to equity, reflecting a different aspect of financial performance. Lastly, the fourth choice compares total assets to total liabilities, which is related to financial leverage rather than investment profitability.