Calculate return on investment to evaluate the profitability of your investments and business decisions
Return on Investment (ROI)
42.86%
over 2 years
Total Cost
$10,500.00
Final Value
$15,000.00
Net Profit/Loss
+$4,500.00
Annualized ROI
19.52%
per year
Excellent Return
Your investment has generated an outstanding return.
Return on Investment (ROI) is a performance measure used to evaluate the efficiency and profitability of an investment. It compares the gain or loss from an investment relative to its cost.
ROI = (Net Profit / Total Investment) × 100
Net Profit = Final Value - Total Investment
Total Investment = Initial Investment + Additional Costs
Use ROI to compare different investment opportunities and choose the most profitable option.
Calculate ROI for business initiatives to determine which projects deserve funding and resources.
Monitor ROI over time to assess whether your investments are meeting expectations and goals.
For accurate ROI, include all costs: purchase price, fees, maintenance, taxes, and opportunity costs.
Use annualized ROI to account for the time factor, especially when comparing investments of different durations.
ROI is useful but doesn't account for risk, liquidity, or other important factors. Use it alongside other metrics.
A "good" ROI depends on the investment type and risk level. Stock market averages around 10% annually. Real estate might target 8-12%. Higher-risk investments should have higher ROI to justify the risk.
ROI shows total return over the entire period. Annualized ROI converts this to an average yearly return, making it easier to compare investments of different durations.
Include all costs: initial purchase, transaction fees, maintenance, taxes, insurance, and any other expenses directly related to the investment.
Yes, negative ROI indicates a loss. For example, if you invest $10,000 and it's now worth $8,000, your ROI is -20%.
ROI doesn't account for risk, time value of money (unless annualized), liquidity, or opportunity costs. It should be used alongside other financial metrics for comprehensive analysis.