Business
ROI Calculator
Return on investment (ROI) measures how much profit an investment generated relative to its cost, expressed as a percentage. It's a quick way to compare the efficiency of different investments or spending decisions.
The formula
profit = amount gained − amount invested
ROI (%) = (profit ÷ amount invested) × 100
Worked example
You invest $1,000 and it grows to $1,400:
profit = 1,400 − 1,000 = 400
ROI = (400 ÷ 1,000) × 100 = 40%
Frequently asked questions
What counts as a good ROI?
It depends heavily on the investment type and time period — a 10% ROI on a savings account might be excellent, while the same 10% on a risky startup investment over several years could be poor. Always compare ROI against the timeframe and risk involved.
Does ROI account for the time value of money?
No — this is a simple ROI calculation. It doesn't discount future returns or annualize the result. For comparing investments over different time periods, consider an annualized return or IRR calculation instead.
Can ROI be negative?
Yes. A negative ROI means the investment lost money — the amount returned was less than the amount invested.