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What is Return on Investment?

Almost every investor in the world knows the meaning of the phrase ROI, or Return on Investment as it one of the most fundamental things to consider when a person has to decide whether to put their hard earned money into any venture. This is actually more than just an abstract or intangible term. That is, itís not a mere concept but can actually be calculated for each type of investment. This is done using a mathematical formula where the return on investment is given by the ratio of the profit made from the venture upon its eventual and entire completion to the actual cost or the amount that is invested into the same venture by the investor. Thus it is obvious that any value of return of investment that is low, that is tending towards zero is one where the profit made from the process is not large enough to be a valid or sound investment option.

In Canada, this is the preferred method of calculating whether or not an investment plan is viable since it a simple process and also a very versatile method since it can be used to calculate the return of investment for any type of process. Thus it is very useful in comparing the feasibility of different plans that normally canít be compared, like things that are totally not related. This is because we use the only thing that is common to almost every investment plan to calculate how good an idea it would be invest money in it Ė money. Thus since almost every type of investment option, be it something to do matchstick manufacturing to constructing space vehicles, can be simplified down to the amount of money that the investors would make, return on investment is an ideal method to help in selecting the most preferred or optimal stratagem of investment for a person or organisation based in Canada.

One fact that many Canadian investors might tend to overlook is that since there is no rigid definition or method to calculate the return of investment of any plan or venture, it is possible that the very process of calculation might be modified and manipulated to obtain the results that one want. Suppose a person is wondering whether to take their money to one Canadian company or another, each organisation might be able to prove that they return on investment would be much higher with them, and it might be true in both cases. This is because by changing the input variables, and also the way that it is calculated or represented, we can modify or alter the results and might be even able to prove in one case that the first option would be better, and also considering different variables that the option is more profitable.
Most Canadians have a lot of tools and also whole departments of investment firms devoted and dedicated to nothing be calculating the return on investment on various ventures so that they can decide what to do with their clients money. All that you need to do to obtain a complete investment plan analysis is to head down to your investment bankís headquarters in Canada.

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