What is ROI Calculation?
ROI (Return on Investment) calculation helps businesses measure profitability of investments. This essential financial metric compares net profit to investment cost, expressed as percentage. Investors use ROI calculation to evaluate efficiency of different investments, compare stock performance, or analyze business expansion viability. Our ROI calculator simplifies complex financial analysis with instant results.
ROI Formula
ROI = [(Total Return - Total Investment) / Total Investment] × 100
How to Use This Calculator
Enter total investment amount and total return received. Click calculate to instantly get ROI percentage. Our smart calculator automatically processes the numbers using standard ROI formula. Use clear button to reset fields. Bookmark page for future financial analysis. Suitable for real estate ROI, marketing campaigns, stock investments, and business project evaluations.
Calculation Process
| Step | Action | Example |
|---|---|---|
| 1 | Subtract Investment from Return | $15,000 - $10,000 = $5,000 |
| 2 | Divide by Investment Cost | $5,000/$10,000 = 0.5 |
| 3 | Multiply by 100 for Percentage | 0.5 × 100 = 50% ROI |
Advantages & Disadvantages
Advantages:
- Simple metric for quick profitability assessment
- Universal application across industries
- Helps compare multiple investment options
- Identifies underperforming assets quickly
- Supports data-driven business decisions
Disadvantages:
- Ignores time value of money
- Doesn't account for risk factors
- Can't compare investments of different durations
- Oversimplifies complex investments
- Susceptible to accounting manipulation