Return on Investment Calculator
Calculate the return on investment for a business venture or investment using our online calculator. By inputting the initial investment amount, final value or earnings, and any additional costs or expenses, you can calculate the ROI as a percentage.
Breakdown
Return on Investment Formula & Example
The basic formula for calculating ROI is as follows:
- ROI (%) = [ (GI - CI) / CI ] × 100
- Where,
- GI is the gain from investment, CI is the cost of investment.
Example: If you bought $10,000 worth of the stock on February 3rd 2016 and sold it for $12,000 on September 20th 2017, you would have a gain of $2,000 which is 20%.
ROI (%) = [ ($12,000 - $10,000) / $10,000 ] × 100
ROI (%) = 0.2 × 100 = 20%
What is Return on Investment Calculator
A Return on Investment (ROI) Calculator is a tool used to measure the profitability and financial performance of an investment over a specific period. It helps individuals and businesses evaluate the return generated relative to the amount invested.
Here's how a typical Return on Investment Calculator works:
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Initial Investment: You input the initial amount of money invested or the cost of the project, product, or asset.
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Ending Value: You enter the final value or proceeds obtained from the investment. This can include the sale price of an asset, the total revenue generated from a project, or any other relevant financial gains.
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Calculation: The calculator calculates the ROI by subtracting the initial investment from the ending value, dividing it by the initial investment, and expressing it as a percentage.
ROI = (Ending Value - Initial Investment) / Initial Investment * 100
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Displaying the Result: The calculator displays the calculated ROI, which represents the percentage return on the investment.
The ROI is a widely used financial metric to assess the efficiency and profitability of an investment. It helps individuals and businesses determine whether an investment has been profitable or not. A positive ROI indicates that the investment has generated a profit, while a negative ROI suggests a loss.
It's important to note that ROI does not consider the time it takes to generate the return or the potential risks associated with the investment. It is a simple metric that measures the return relative to the initial investment.
When using a Return on Investment Calculator, it's essential to consider other factors such as the time period, cash flows, inflation, and potential risks involved. Additionally, comparing ROI with industry benchmarks or similar investments can provide further insights into the investment performance.
ROI is just one of many financial metrics used to evaluate investments. Depending on the context, other metrics such as net present value (NPV), internal rate of return (IRR), payback period, or profitability index may also be considered to gain a comprehensive understanding of the investment's financial viability.
When making investment decisions, it's advisable to consult with financial professionals or experts who can provide guidance by considering various factors and conducting a thorough analysis of the investment opportunity.
Return on Investment Calculator Example
Certainly! Here's an example of a Return on Investment (ROI) calculator that utilizes a table to calculate the ROI for different investment scenarios:
| Investment | Initial Investment | Final Value | ROI |
|---|---|---|---|
| Project A | $10,000 | $12,500 | 25% |
| Project B | $20,000 | $22,000 | 10% |
| Project C | $15,000 | $16,500 | 10% |
In this example, we have three different investment projects with their respective initial investments and final values. The calculator calculates the Return on Investment (ROI) for each project.
To calculate ROI, you can use the formula: ROI = ((Final Value - Initial Investment) / Initial Investment) * 100
For instance, for Project A with an initial investment of $10,000 and a final value of $12,500, the ROI would be 25%.
Similarly, using the same formula, you can calculate the ROI for Projects B and C based on their respective initial investments and final values mentioned in the table.
ROI is a commonly used financial metric to assess the profitability of an investment. It represents the percentage increase in value relative to the initial investment. However, it is important to note that ROI does not consider the time period or the duration of the investment, and it does not account for other factors such as cash flows, risk, or the time value of money. Therefore, it should be used in conjunction with other financial metrics to evaluate investment performance comprehensively.
