Recently, the concept has also been applied to scientific funding agencies’ (e.g., National Science Foundation) investments in research of open source hardware and subsequent returns for direct digital replication.
[2] ROI and related metrics provide a snapshot of profitability, adjusted for the size of the investment assets tied up in the enterprise.
[4] In a survey of nearly 200 senior marketing managers, 77 percent responded that they found the "return on investment" metric very useful.
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.
[citation needed] ROI should be accompanied by the underlying data that forms the inputs, this is often in the format of a business case.
For long-term investments, the need for a Net Present Value adjustment is great and without it the ROI is incorrect.
One or more separate measures, aligned with relevant compliance functions, are frequently provided for this purpose.
For a single-period review, divide the return (net profit) by the resources that were committed (investment):[3] or or or Complications in calculating ROI can arise when real property is refinanced, or a second mortgage is taken out.
New plants and equipment, inventories, and accounts receivable are three of the main categories of investments that can be affected by marketing decisions.
Return on Investment helps identify marketing mix activities that should continue to be funded and which should be cut.
[7] The social cost of carbon is one value that can be incorporated into Return on Integration calculations to encompass the damage to society from greenhouse gas emissions that result from an investment.
This is an integrated approach to reporting that supports Integrated Bottom Line (IBL) decision making, which takes triple bottom line (TBL) a step further and combines financial, environmental and social performance reporting into one balance sheet.
This approach provides decision makers with the insight to identify opportunities for value creation that promote growth and change within an organization.