Reviewed by:
David Chen, CFA
Chartered Financial Analyst & Investment Strategist
Calculate your Return on Investment (ROI) by providing any two of the following values: Initial Investment, Final Value, Net Profit, or ROI. The calculator will solve for the missing fields.
Return on Investment (ROI) Calculator
Enter any 2 values to calculate the others.
ROI Formula
Return on Investment is calculated using two primary formulas that link the investment’s cost, final value, and profit.
Net Profit = Final Value – Initial Investment
ROI (%) = (Net Profit / Initial Investment) * 100
Formula Source: Corporate Finance Institute – ROI Formula (2025)
- Initial Investment: The total cost to acquire the investment.
- Final Value: The value of the investment at the end of the period (or when it was sold).
- Net Profit: The gain or loss on the investment (Final Value minus Initial Investment).
What is Return on Investment (ROI)?
Return on Investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment. It compares the net profit from an investment to its initial cost.
ROI is expressed as a percentage and is a versatile metric that can be used to compare the profitability of different investments. A positive ROI means the investment generated a profit, while a negative ROI means it resulted in a loss. It is one of the most common ways to assess an investment’s success.
How to Calculate ROI (Example)
Example Calculation:
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1. Determine the Initial Investment.
You buy 100 shares of a stock for $50 per share. Your Initial Investment is $5,000.
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2. Determine the Final Value.
One year later, you sell all 100 shares for $65 per share. Your Final Value is $6,500.
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3. Calculate Net Profit.
Net Profit = $6,500 (Final Value) – $5,000 (Initial) = $1,500
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4. Calculate ROI.
ROI = ($1,500 / $5,000) * 100 = 30%
Frequently Asked Questions (FAQ)
What is a “good” ROI?
A “good” ROI is subjective and depends on the investment type, risk, and time horizon. A stock market investment might aim for 7-10% annually (matching the S&P 500 average), while a high-risk tech startup investment might need a much higher potential ROI to be worthwhile.
Does ROI account for time?
No, the basic ROI formula does not account for the length of time the investment was held. A 20% ROI over one year is excellent, but a 20% ROI over ten years is poor. For time-adjusted returns, you should use metrics like “Annualized ROI”.
What are the limitations of ROI?
Besides not accounting for time, ROI can be manipulated based on what is included in “Costs” and “Returns.” It also doesn’t account for risk. Two investments might have the same 15% ROI, but one might be a stable government bond and the other a highly volatile cryptocurrency.