what are the limitations of roi 
examples like jo s above reveal some limitations of using roi particularly when comparing investments while the roi of jo s second investment was twice that of the first investment the time between jo s purchase and the sale was one year for the first investment but three years for the second jo could adjust the roi of the multi year investment accordingly since the total roi was 40 to obtain the average annual roi jo could divide 40 by 3 to yield 13 33 annualized with this adjustment it appears that although jo s second investment earned more profit the first investment was actually the more efficient choice roi can be used in conjunction with the rate of return ror which takes into account a project s time frame one may also use net present value npv which accounts for differences in the value of money over time due to inflation the application of npv when calculating the ror is often called the real rate of return 