Return on Investment (ROI) calculator
About this calculator?
This is a tool for deducing the Gain or loss and ROI of an investment, allowing you to plan for profitable or reject unprofitable investment options. This can also lead you to discover the Annualized ROI or how long it could take to recuperate investment costs.
ROI
ROI is the ratio of the invested and returned amounts (net gain to its net cost). Typically, ROI is expressed as a percentage. As a result, when a computation yields a result of ROI = 0.1, financial analysts report it as ROI = 10%.
ROI is one of the most often used techniques of analyzing the economic implications of investments, among other basic metrics of profitability. The primary benefit of utilising ROI is the simplicity in deducing investment profitability since it is based on readily available data and its value is easy to grasp and interpret. Furthermore, because ROI is expressed as a percentage, it is simple to compare the outcomes of various investments. As a result, owing to ROI, you may select the most advantageous option.
Evaluating ROI
Knowing the efficiency of investments can allow investors to agree or disagree in short term and long term business strategies. ROI is important in investment decisions.
The caveat of the ROI formula is that it ignores any potential hazards linked with the investment. This can be a drawback without utilising other formulas to generate other financial data to provide the whole scope of investment.
Financial decisions
ROI can be a helpful statistic for estimating the surplus of net investment benefit and it may also be utilized to make sound financial decisions. ROI is generally utilized as an auxiliary at the first stage of evaluating an investment project since it is a straightforward approach. In general, the decision criterion is defined in the following way:
ROI ≥ LV: The investment is profitable.
ROI < LV: The investment is unprofitable.
Where LV is a predefined limit value.
An investor has capital to invest and has only one investment alternative, the decision criterion is formulated as follows:
ROI ≥ 0: The investment is profitable.
ROI < 0: The investment is unprofitable.
The end-goal.
The end-goal of utilising this calculator is to allow you to develop an effective financial option through quick deductions in a variety of cost-benefit analyses, resulting in a Gain or Loss and ROI values. Also, you will be able to calculate the Annualized ROI potential or even many years it would take to recuperate the investment.
Necessary terms.
Invested amount: This is the amount of money that will be or has been invested.
Returned amount: This is the total amount of money that will be or has been received after the investment.
Gain or loss: This is the indication of whether a marketing campaign has been profitable or unprofitable in generating revenue from the total cost of the marketing campaign.
ROI: An abbreviation of ‘Return On Investment’ referring to the percentage value that indicates how profitable a business is.
Time difference: This is the amount of time, in years, that is required to recuperate the investment.
Annualized ROI: This is the annualized rate of return is a process for determining investment returns on an annual basis.
The formula.
Gain Or Loss
Gain Or Loss: GOL
Returned Amount: RA
Invested Amount: IA
GOL = RA - IA
ROI
Return Of Investment: ROI
Returned Amount: RA
Invested Amount: IA
ROI = ((RA - IA) / IA) * 100
Time Difference
Time Difference: TD
Ending Year: EY
Starting Year: SY
TD = EY - SY
Annualized ROI
Annualized ROI: AROI
Returned Amount: RA
Invested Amount: IA
Time Difference: TD
AROI = (((RA / IA) ^ (1 / TD)) - 1) * 100
Time Difference
Time Difference: TD
Returned Amount: RA
Invested Amount: IA
Annualized ROI: AROI
TD = (log (RA / IA )) / (1 * ( log ( 1 + (AROI / 100) / 1)))
Share this calculator.
Thank you for taking the time to interact with this calculator. Hopefully, this has provided you with insight to assist you with your business.
