What is ROI?
ROI (Return on Investment) measures profitability of an investment. Learning how to calculate ROI helps businesses evaluate efficiency of expenditures, compare investments, and make data-driven decisions. It's crucial for marketing campaigns, equipment purchases, and financial planning.
ROI Calculator
ROI Formula
ROI = [(Final Value - Initial Investment) / Initial Investment] × 100
How to Use This Calculator
Enter initial investment amount and final value received. Click calculate to get instant ROI percentage. Our calculator helps evaluate marketing campaigns, business investments, and financial returns. Use clear button to reset fields and perform multiple calculations.
Calculation Process
| Step | Action | Example |
|---|---|---|
| 1 | Determine initial investment | $10,000 |
| 2 | Determine final value | $15,000 |
| 3 | Subtract initial from final | $5,000 |
| 4 | Divide by initial | 0.5 |
| 5 | Multiply by 100 | 50% ROI |
Advantages & Disadvantages
Advantages:
- Simple universal metric for profitability
- Enables quick investment comparisons
- Helps in resource allocation decisions
- Identifies successful initiatives
- Measures time-bound returns
Disadvantages:
- Ignores time value of money
- Doesn't consider risk factors
- Susceptible to accounting variations
- Oversimplifies complex investments
- No standard calculation method