# Understanding, factor, function analysis, and how to calculate ROI

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## Understanding, factor, function analysis, and how to calculate ROI

If you are doing business, you need to know the benchmark for business success. Therefore, one of its measures comes from Return of Investment (ROI). ROI or which is often referred to as a return rate of investment. Why is this important? Because you can evaluate operational activities based on investment returns. Therefore, you need to know how to calculate ROI

Experts who have crossed into the business world say that ROI is very important. The assets that are calculated well that have been lost or still there need to be carefully observed. This is part of the investment. Like the return of assets, the budget spent, and the initial capital used.

To find out this, you need to understand how to calculate ROI. However, before entering the way to count ROI, you need to know the definition of return of investment or commonly called the return on the return on investment.

### Understanding Return of Investment

Return of Investment is a kind of ratio used to find out the number of assets within the company. The ratio will be used as a measure in determining management efficiency. The result is a percentage that shows all the total assets within the company.

### Factors Affect Return of Investment

Two factors influence the return of investment them, namely:

• Turnover is common because the invention of assets is so fast. However, it becomes the basis of the business in a company. Moreover, it will occur during operational activities
• Profit Margin is a net profit obtained from the number of sales. The results are usually in percentage form. Profit margins are used to measure profits while connecting them to sales.

By knowing these factors, the company will get two advantages. First, provide information on how much company profits. Second, know-how effective the number of assets is within the company.

### Return of Investment analysis function

There are five functions when you analyze the return of investment which includes:

• Measure all forms of efficiency ranging from production, distribution section, capital used to sales department
• Know the weaknesses and strengths of the company. This is important if you know industrial data so that it can be compared between your company and others.
• Measure the efficiency of each employee. For example, every employee gets capital to be used according to his work.
• Knowing how many benefits are obtained from each product.
• Perform control as well as the basis for making decisions.

### How to calculate Roi.

After you learn and find out how understanding, factors, and analysis function, you need to understand how to calculate ROI. This is an important part so that the business wheel remains properly. You and other members pay attention to how to calculate ROI so that it is not wrong in making decisions or spending capital.

How to calculate ROI is all sales minus investment. Then the investment is multiplied by 100%. Easily calculate it, right? Often a business is only stunned by how to increase sales. There are businesses supported by investment. So, the investment fund needs to be taken into account.

Therefore, how to calculate ROI is important so that in the future it can understand intactly related to investment. Especially if later businesses develop on a large scale. Of course, there will be many investments that will help your business better.