ROI Calculator
ROI Calculator is a financial tool that helps you evaluate the profitability of an investment by comparing its gain or loss relative to its cost.
What Is an ROI Calculator?
An ROI (Return on Investment) Calculator is a financial tool that helps you evaluate the profitability of an investment by comparing its gain or loss relative to its cost. It’s essential for assessing stocks, real estate, business ventures, and other financial decisions.
Why Use an ROI Calculator?
✅ Investment Analysis – Determine if an asset is worth the cost
✅ Compare Opportunities – Rank investments by their returns
✅ Track Performance – Measure success over time
✅ Business Decisions – Evaluate marketing, equipment, or expansion ROI
How to Calculate ROI
Formula: ROI (%) = [(Current Value − Cost) / Cost] × 100
Example:
- Cost: $10,000
- Current Value: $15,000
- ROI: [(15,000−15,000−10,000) / $10,000] × 100 = 50%
Key Factors Affecting ROI
| Factor | Impact |
|---|---|
| Investment Cost | Lower cost = Higher potential ROI |
| Holding Period | Short-term vs. long-term gains |
| Expenses/Fees | Taxes, maintenance, or transaction costs reduce ROI |
| Market Conditions | Volatility can increase or decrease returns |
Types of ROI
| Metric | Use Case |
|---|---|
| Simple ROI | Basic profit/loss calculation |
| Annualized ROI | Adjusts for different time periods |
| ROI with Dividends | Includes passive income (stocks, real estate) |
Limitations of ROI
- Ignores Risk – High ROI doesn’t always mean a safe investment
- No Time Adjustment – Doesn’t account for compounding (use CAGR for that)
- Excludes External Costs – Taxes, fees, or inflation may reduce real returns
Related Financial Calculators
1️⃣ Compound Interest Calculator – Project long-term growth
2️⃣ CAGR Calculator – Measure annualized returns
3️⃣ Break-Even Calculator – Find when an investment becomes profitable