Return on ad spend measures how much revenue your advertising generates per unit of spend. If a campaign spent $1,000 and generated $4,000 in attributed revenue, its ROAS is 4 (often written 4x or 400%).
ROAS is only as good as the revenue figure behind it. Platform-reported ROAS uses the platform's own attribution rules, may include view-through conversions, may credit sales another channel closed, and doesn't know about refunds. Measuring ROAS from your own sales data, net of refunds, gives a more reliable number. And because ROAS ignores margins, compare it with your break-even ROAS, which is 1 divided by your gross margin: at a 40% margin, break-even ROAS is 2.5.