ROI Calculator

Calculate Return on Investment (ROI) and net profit easily.

Measure the efficiency of an investment or compare the efficiencies of several different investments.

What is Return on Investment (ROI)?

Return on Investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.

It is arguably the most common and versatile financial metric because of its simplicity. Whether you're tracking the performance of a stock, a real estate flip, or a marketing campaign, ROI gives you a quick snapshot of "bang for your buck."

How is ROI Calculated?

To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.

The ROI formula used in this tool is:

► ROI = [(Current Value of Investment - Total Cost of Investment) / Total Cost of Investment] × 100

Components:

Amount Invested: The initial capital you put into the project.
Amount Returned: The final value or proceeds from selling the investment.
Investment Costs: Any additional fees, taxes, or maintenance costs incurred during the investment period.

Interpretation of ROI Results

Positive ROI: A positive percentage means your investment was profitable. The higher the percentage, the better the performance.
Negative ROI: A negative percentage indicates a loss. It means the investment returned less than its total cost.
Zero ROI: You "broke even"—you got exactly as much back as you put in.

Limitations of ROI

While useful, ROI has some drawbacks:

Time Factor: ROI doesn't account for how long the investment was held. A 50% ROI over one year is much better than a 50% ROI over ten years.
Risk: It doesn't consider the risk associated with the investment.
Cash Flow: It focuses on the end result rather than the timing of cash moving in or out.

When to Use an ROI Calculator?

Business Spending: Evaluating whether to buy new equipment or hire a new employee.
Stock Market: Comparing the performance of different stocks in your portfolio.
Real Estate: Calculating the profit after buying, renovating, and selling a property.
Digital Marketing: Determining if an ad campaign generated more in sales than it cost in clicks.

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