Other ROI Metrics
Other “financial metrics” are also treated as ROI figures at times.
“Return on Invested Capital,” “Return on Capital Employed,” “Return on Total Assets,” “Return on Equity,” and “Return on Net Worth,” are sometimes called “return on investment.”
In still other cases, the term refers simply to the cumulative cash flow results of an investment over time, such as shown in the figure above.
In brief, several different return on investment metrics are in common use and the term itself does not have a single, universally understood definition. Therefore, when reviewing ROI figures, or when asked to produce one, it is a good idea to be sure that everyone involved:
- Defines return on investment the same way
- Understands the limits of the concept when used to support business decisions
For practical guidance on building an ROI business case and other financial metrics, see the Solution Matrix Ltd. white papers or the Business Case Guide
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