Welcome to the Simple Return on Investment (ROI) Calculator—the most fundamental and universal tool in finance for judging a project’s success.
ROI measures the profitability of an investment relative to its cost, giving you a clear percentage that indicates value. Whether you’re evaluating a marketing campaign, a new piece of equipment, or a stock investment, the ROI tells you exactly what you gained (or lost) for every dollar spent. Use this calculator to compare the effectiveness of different investments and prioritize those that yield the highest returns.
Simple ROI (Return on Investment) Calculator
Measure the profitability of an investment or project.
Results:
Net Profit ($): 0.00
Return on Investment (ROI): 0.00%
Short Instructions
To use the calculator, you need to provide two figures:
- Gain from Investment ($): The total proceeds you received from the investment (i.e., the final value of the investment, including the initial cost).
- Cost of Investment ($): The initial amount of money or resources you put into the investment.
Click ‘Calculate ROI’ to receive both the dollar amount of your Net Profit and the resulting Return on Investment (%).
How This is Helpful for Business
ROI is the bedrock of business decision-making and is used across nearly every department:
- Performance Measurement: It serves as a normalized, standard metric to compare the profitability of vastly different opportunities (e.g., comparing the ROI of buying a new machine versus hiring new staff).
- Capital Allocation: By identifying where the best returns are generated, management can strategically allocate future capital to maximize overall business profitability.
- Justifying Spending: A positive ROI is often required to justify major business expenditures or to secure funding for new projects. If the ROI is negative, the project destroyed value.
- Investor Reporting: Investors rely heavily on ROI to gauge management efficiency and the value created by the company’s decisions.
What Actually This is Based On
The Simple ROI calculation is a fundamental financial ratio that expresses net profit as a percentage of the initial cost.
The calculation is performed in two steps:
1. Net Profit Calculation
This determines the absolute dollar amount of value created.
2. ROI Percentage Calculation
This expresses the Net Profit as a return relative to the initial cost. The result is always shown as a percentage.
Interpretation: If the ROI is $20\%$, it means you made $\$ 0.20$ in profit for every $\$ 1.00$ you initially invested. If the ROI is $-5\%$, you lost $\$ 0.05$ for every dollar invested.