ROI Calculator

How to Calculate ROI

Return on Investment is calculated using these formulas:

ROI provides a standardized way to compare the profitability of different investments, regardless of their size or duration.

Understanding ROI Results

Interpreting your ROI calculation:

• Positive ROI: The investment generated a profit (higher is better)
• ROI = 0%: The investment broke even (final value equals initial investment)
• Negative ROI: The investment lost money

For example, an ROI of 25% means that for every dollar invested, you earned 25 cents in profit.

Limitations of Simple ROI

While ROI is useful, it has some limitations to be aware of:

• It doesn't account for the time period of the investment
• It doesn't consider risk factors
• It doesn't include external factors like inflation
• It doesn't account for cash flow timing

For more complex investment analysis, consider using metrics like IRR (Internal Rate of Return) or NPV (Net Present Value).

How to Use This Calculator

1. Enter your initial investment amount (the money you put in)
2. Enter the final value of your investment (what it's worth now)
3. Click "Calculate" to see your net return and ROI percentage

Use these results to evaluate your investment performance and make informed decisions about future investments.