4. Return on investment (ROI) and the benefits of calculating break-even point (or payback time)

Return-on-investment (ROI) analysis is one of the many approaches used to conduct a business case or business plan. ROI is when decision-makers evaluate the investment to be made by comparing the scale and timing of the expected gains, on the one hand, with the investment costs, on the other.

Decision-makers will also focus on improving their ROI by reducing costs, increasing gains, or accelerating them. Simplified ROI works well in situations where both the gains and costs of an investment are easily known, and when it's clear that they come from the action taken. All other things being equal, the investment with the highest ROI will be considered the best investment. However, the return on investment calculation itself says nothing about the magnitude of the returns or risks in the investment.

Investments always have financial consequences...