What does the term 'return on investment' (ROI) measure?

Return on investment (ROI) is a financial metric used to evaluate the efficiency and profitability of an investment relative to its cost. It measures how much profit is generated from an investment compared to the initial amount invested. The formula for ROI typically involves taking the net profit from the investment, subtracting the initial cost, and dividing that figure by the initial cost, often expressed as a percentage. By focusing on the relationship between the gains from the investment and its costs, ROI provides insight into how well the investment is performing in generating returns.

In contrast, the total amount spent on marketing does not provide a measure of efficiency but simply indicates expenditure. The net worth of a business relates to the overall value of assets minus liabilities, which is a broader measure and not specifically tied to the effectiveness of particular investments. Liquidity of assets assesses how easily assets can be converted into cash, which is unrelated to the profitability or efficiency of an investment. Thus, ROI distinctly measures efficiency, making it the best answer for this question.