What is ROAS?
ROAS (return on ad spend) is revenue from ads divided by what the ads cost.
ROAS measures revenue, not profit. Whether a ROAS is good depends on margin.
Break-even ROAS is 1 divided by gross margin. At 25 % margin you need ROAS 4 just to break even.
Formula
ROAS = revenue / ad spend
Example
Ads cost 1,000 EUR and brought 5,000 EUR revenue. ROAS is 5.