ROI Calculator
Calculate your return on investment (ROI) to evaluate profitability of your marketing, business, or personal investments.
What is ROI?
ROI, or Return on Investment, is a profitability metric used to evaluate the efficiency of an investment. It compares the gain from an investment relative to its cost. This simple but powerful ratio helps individuals and businesses make informed financial decisions.
ROI Formulas & Metrics
We calculate three key metrics:
- Net Profit: Final Value minus total invested (initial + additional).
- ROI (%): (Net Profit / Total Invested) × 100.
- Payback Period: Time (years) × (Total Invested / Net Profit).
How to Use
- Enter Initial Investment amount.
- Enter Final Value (proceeds or current value).
- Specify time period in years for payback calculation.
- Optionally add any Additional Contribution.
- Click “Calculate ROI” to show results below.
Example
With an initial $1,000, final value $1,500, extra $200, and 2 years time:
- Net Profit = $1,500 - ($1,000 + $200) = $300
- ROI = (300 / 1,200) × 100 = 25%
- Payback Period = 2 × (1,200 / 300) = 8 years
Benefits
- Quick insight into ROI and profitability.
- Shows both percentage return and actual net profit.
- Includes payback period calculation.
Limitations
- Assumes all returns realized at once.
- Does not account for cashflow timing or inflation.
- Time factor is simple; for compound growth use Compound Interest Calculator.
Related Calculators
", "keywords"Frequently Asked Questions
What is ROI and how is it calculated?
ROI (Return on Investment) is calculated as (Net Profit / Total Invested) × 100, where Net Profit is Final Value minus total invested cost.
What is a good ROI percentage?
A 'good' ROI varies by sector. In general, 10–15%+ is considered healthy. Compare against your alternative opportunities.
How is payback period calculated?
Payback period estimates how long it takes to recover your investment: Time Period × (Total Invested / Net Profit).
Can ROI be negative?
Yes. If the final value is less than the total investment, ROI will be negative indicating a loss.
When should I use ROI vs. NPV?
ROI is great for quick percentage returns. Use NPV when timing and cashflow matter over multiple periods.
References
