How To Calculate ROI

Are you looking for How To Calculate ROI then this article is for you. I guide you ROI calculate for Business, Excel, Digital Marketing, Investment, Project.

What is ROI

Table of Contents

Return on investment is Business and Finance term usually abbreviated as ROI. Return on Investment (ROI) is a performance measure used to calculate the efficiency of an investment or compare the efficiency of a number of different investments.

Every investment has multi-purpose. Most of us invest so that we get something back in addition to what we invested – to earn some benefit or return. Before thinking about any investment opportunities that are even considered, ROI is a solid base from which to go forth.

The metric can be applied to anything from Stockmarket, Real estate, Mutal funds, Digital Marketing, Project fixed-income investments like PPF or Fixed Deposit or RD and even a small Farm.

In Simple words, ROI calculations are simple and help an investor decide whether to take or skip an investment opportunity. ROI indicates how your investment performed.

How To Calculate ROI

Return on investment(ROI) is generally calculated as total earnings divided by the cost of investment. Total Earning is calculated subtracted from Gain from the investment to Cost of Investment.

The bigger the ratio, the higher the gains accrued.

ROI Formula

ROI=(Gain from the investment-Cost of Investment)/(Cost of Investment)

How To Calculate ROI

ROI Example

Let’s say you invest in Stockmarket or any Business $20000 and you gain return $30000. What is your ROI

ROI=(30000-20000)/20000=1/2 or 50%

How to Calculate ROI in Excel

Open Microsoft Excel and write Gain from the investment, Cost of Investment, Total earnings, and ROI horizontally or vertically as per your choice. In this case, I write on A1, B1, C1, and D1 Cells.

To calculate Total earnings, select one cell(C2) and write =(A2-B2) (In this case). Total Earning is calculated subtracted from Gain from the investment to Cost of Investment. Select cells as per you.

To calculate ROI, Select one cell(D2) and write =(C2/B2) (In this case). ROI is calculated as total earnings divided by the cost of investment. Select cells as per you.

How to Calculate ROI in Excel file Download here.How to Calculate ROI in Excel

Conclusion

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Also Read: How To Calculate Profit Margin