ROI Calculator
Calculate Return on Investment and profit margins.
Why Calculate ROI?
Return on Investment (ROI) is the most common metric for evaluating the efficiency of an investment. It tells you how much money you've made (or lost) relative to how much you spent.
The Formula
The basic ROI formula is simple:
ROI = ((Returned Amount - Invested Amount) / Invested Amount) × 100
Annualized ROI
If your investment spans multiple years, simple ROI can be misleading. Annualized ROI tells you the average yearly growth rate (CAGR), allowing you to compare investments of different durations.
How to Use This Tool
- Enter Investment: The initial cost or amount you put in.
- Enter Return: The final value or total amount you received back.
- Enter Time: The duration of the investment in years (optional, for annualized calculation).
Frequently Asked Questions (FAQ)
What is ROI?
ROI stands for Return on Investment. It is a performance measure used to evaluate the efficiency or profitability of an investment.
How is ROI calculated?
ROI is calculated by subtracting the initial cost of the investment from the final value, dividing by the cost, and multiplying by 100. Formula: (Net Profit / Cost) × 100.
What is a good ROI?
A 'good' ROI depends on the risk and time horizon. For stocks, 7-10% annually is often considered good. For business projects, companies might target 15-20%.
Is this tool free?
Yes, the ROI Calculator is completely free to use.