Financial Tool
ROI Calculator
Calculate Return on Investment and Annualized ROI.
Total ROI
20.00%
Net Profit
$200.00
Annualized ROI
20.00% per year
Σ The Formula
ROI = (Net Profit / Cost) × 100
Real World Examples
Stock Purchase
Buy $1,000, Sell $1,200 → ROI = 20%
Business Equipment
Spend $5,000, Generate $8,000 Profit → ROI = 60%
# About This Calculator
Return on Investment (ROI) is one of the most universal metrics in finance and business. It evaluates the efficiency of an investment or compares the efficiency of several different investments.
How ROI works
The concept is simple: take the gain from an investment, subtract the cost of the investment, and divide the result by the cost of the investment. A positive ROI means the investment made money; a negative ROI means it lost money.
Real-World Examples
- Small Business: A bakery spends $2,000 on a new oven (Investment). That oven helps produce enough extra bread to generate $3,000 in net profit over a year. The ROI is 50%.
- Stock Market: You buy 10 shares of a company for $100 each ($1,000 total). You sell them a year later for $1,200. Your gain is $200. The ROI is ($200/$1,000) = 20%.
ROI vs. Annualized ROI
Standard ROI doesn't account for time. A 20% return over 1 year is fantastic. A 20% return over 10 years is poor. Annualized ROI fixes this by showing you the yearly effective rate, making it easier to compare investments of different durations.
Frequently Asked Questions
What is a good ROI?+
A 'good' ROI depends on the risk and time. For sunlight stock market investments, a historical average is around 7-10% annually. For high-risk business ventures, investors might expect 20-30% or more.
Does this calculator include time?+
Yes. While standard ROI is time-agnostic, our tool also calculates 'Annualized ROI' based on the duration you enter, giving you a better picture of efficiency.
Can ROI be negative?+
Absolutley. If the 'Amount Returned' is less than the 'Amount Invested', your ROI will be negative, representing a loss.
How do I calculate ROI for multiple years?+
The standard ROI formula stays the same regardless of time: (Total Gain / Total Cost). However, to understand the yearly performance, you should look at the 'Annualized ROI' output.
Is ROI Calculator free to use?+
Yes, ROI Calculator on Matheric is completely free to use. We believe in accessible education and utility for everyone.
How accurate is ROI Calculator?+
We use standard mathematical formulas and high-precision computing algorithms to ensure results for ROI Calculator are accurate for academic and professional use.