Return On Ad Spend (ROAS) is often confused with and used interchangeably with Return On Investment (ROI), but the two are very different.
ROAS is a gross comparison of sales versus ad cost, and does not consider profit margin, fees, overhead, etc.
ROAS = (Value/Cost) x 100
For example, if you spent $100 on PPC, and earned $300 in orders from those ads, your ROAS is:
ROAS = 300% = ($300/$100) x 100
This means you are operating at a 3:1 gross ratio, where every $1 of spend generated $3 in order value.
ROI is a net metric and takes profit margin (and/or expenses) into consideration. Following is a summary of how to calculate ROI: