Understanding ROI

The video tutorial explains the concept of Return on Investment (ROI) and its significance for businesses. It provides a formula to calculate ROI and demonstrates its application through examples. The tutorial includes a detailed walkthrough of calculating ROI for Nancy's chocolate business and an exercise for viewers to calculate ROI for Sam's skateboard business.

What does ROI help businesses determine?

• The number of employees needed

• The market share of the business

• The cost-effectiveness of their products or services

• The total revenue of the business

Which formula is used to calculate ROI?

• Net profit divided by total revenue

• Net profit divided by cost of investment multiplied by 100

• Total revenue divided by cost of investment

• Cost of investment divided by net profit

In Nancy's example, what is the cost to produce one box of chocolates?

• $5.50

• $6.75

• $3.25

• $10

What is Nancy's net profit per box of chocolates?

• $10

• $6.75

• $4.00

• $3.25

What is Nancy's ROI percentage for her chocolates?

• 60%

• 48%

• 57%

• 35%

What is the sale price of one skateboard in Sam's business?

• $35

• $55

• $65

• $45

How much does it cost Sam to produce one skateboard?

• $20

• $35

• $55

• $50

What is the net profit for Sam's skateboard?

• $25

• $15

• $20

• $30

Using the ROI formula, what is Sam's ROI percentage for one skateboard?

• 60%

• 50%

• 57%

• 48%

Why is it important for businesses to calculate ROI?

• To calculate the total revenue

• To find the market share

• To assess the cost-effectiveness of their investments

• To determine the number of employees needed