Return on investment is also known as the rate of return or the rate on profit. It evaluates the efficiency of an investment. ROI looks at the money invested and the gains (or losses) realized. It is a ratio.

Here is the formula:

In the above formula the gain from investment would be the proceeds received from selling the investment. Suppose you bought it for $1000 and a year later you sold it for $1050, then 50/1000 is 5%.

For more information, The Main KPI Types has a list of some KPIs and their types.