How to Calculate ROI
ROI helps compare how much gain or loss came from an investment.
Formula
Net Gain = Return - Investment
ROI = Net Gain / Investment * 100Example
If investment is $5,000 and return is $6,500, net gain is $1,500. Divide $1,500 by $5,000 and multiply by 100. ROI is 30%.
Limitations
ROI does not show how long the return took, how risky the investment was, or whether cash flow was stable. Use it as one decision input, not the whole decision.
Use the calculator
Use the ROI Calculator to calculate net gain and ROI percentage quickly.
FAQ
What is the ROI formula?
ROI equals net gain divided by investment, multiplied by 100.
What is net gain?
Net gain is return amount minus the original investment amount.
Is ROI enough to judge an investment?
No. ROI is useful, but it does not show risk, time period, cash flow, or opportunity cost.