ROI calculator
Enter what you invested, what you got back and how long it took. The ROI calculator shows the return on investment, the profit and the annualized ROI, so investments of different lengths become comparable. A second mode computes ROI from a company’s income, sales and invested capital.
Example: Calculate: an investment (amount in, amount back) · Amount invested 10,000 · Amount returned 13,000 · Holding period 3 · Period in: years → ROI (return on investment): 30%. Source: OpenStax Principles of Accounting, Vol. 2, 12.3: Return on Investment = sales margin × asset turnover (Rice University). Updated: .
How it is calculated
ROI formula
ROI = (amount returned − amount invested) ÷ amount invested × 100%. Invest 10,000, get back 13,000 after three years: ROI = 3,000 ÷ 10,000 = 30%.
Annualized ROI
A plain ROI ignores time. To compare a 3-year and a 5-year investment, convert it into a yearly rate: annualized ROI = (amount returned ÷ amount invested)1/years − 1. 30% over three years is 9.14% a year, not 10%, because returns compound.
| Invested | Returned | Period | ROI | Annualized |
|---|---|---|---|---|
| 10,000 | 13,000 | 3 years | 30% | 9.14% |
| 10,000 | 13,000 | 5 years | 30% | 5.39% |
| 5,000 | 6,000 | 1 year | 20% | 20% |
| 2,000 ad spend | 5,000 gross profit | – | 150% | – |
ROI for a business: the DuPont approach
In managerial accounting, ROI = income ÷ invested capital = profit margin × asset turnover, with profit margin = income ÷ sales and asset turnover = sales ÷ invested capital. A division with 1,000,000 income, 5,000,000 sales and 2,850,000 in assets earns 20% × 1.75 ≈ 35%.
Real estate and marketing ROI
For a rental property, count the purchase price plus closing costs as the investment and the sale price plus net rental income as the return. For marketing, use the extra gross profit – not revenue – as the return; otherwise campaigns look better than they are. In Excel: =(returned-invested)/invested and =(returned/invested)^(1/years)-1.
Frequently asked questions
How do you calculate ROI?
Subtract the amount invested from the amount returned and divide by the amount invested. 13,000 back on 10,000 invested is a 30% ROI.
How do you calculate annualized ROI?
Use (amount returned ÷ amount invested)1/years − 1. A 30% total return over 3 years is 9.14% per year.
What is a good ROI?
It depends on risk and time. Compare the annualized ROI with a low-risk benchmark such as a CD or Treasury yield; the extra return should pay you for the extra risk.
How do you calculate ROI on a rental property?
Investment = purchase price + closing costs + repairs; return = sale price (or current value) + all rent received − operating costs. Then apply the ROI formula and annualize it over the years held.
What is the difference between ROI and ROAS?
ROAS divides revenue by ad spend; ROI divides profit by the investment. A ROAS of 3 can still be a loss if margins are thin.
Sources and legal basis
- OpenStax Principles of Accounting, Vol. 2, 12.3: Return on Investment = sales margin × asset turnover (Rice University)
- OpenStax Principles of Finance, 7.2: Time value of money – FV = PV × (1 + r)^n (annualisierte Rendite)
As of:
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