Describe the concept of 'return on investment' (ROI).

Return on investment (ROI) is a key financial metric used to evaluate the efficiency and profitability of an investment. It is typically expressed as a percentage and is calculated by dividing the net profit generated from the investment by the initial cost of that investment, then multiplying by 100. This metric provides insight into how effectively a particular investment has been utilized to generate returns.

Understanding ROI is crucial for decision-makers because it allows them to compare the profitability of various investments, helping them to make informed financial decisions. A higher ROI indicates that the investment has effectively generated more income relative to its cost, while a lower ROI suggests less effective investment performance.

The other options do not accurately capture the essence of ROI. Employee satisfaction is a qualitative measure unrelated to financial returns. Techniques for reducing expenses focus on cost management rather than measuring returns on investments. Lastly, analyzing market demand is more concerned with assessing consumer needs and market conditions, rather than evaluating the financial performance of investments.