How to Calculate Return on Investment (ROI)
Basic formula for calculating ROI as a percentage.
April 23, 2009
Here's the basic formula for calculating ROI as a percentage.
Return on investment (ROI) is the ratio of money earned or lost on an investment relative to the amount of money invested. ROI is typically expressed as a percentage rather than a decimal value, and is based on returns over a period of time (most often stated for one calendar or fiscal year).
Here's the basic calculation for determing Return on Investment (ROI):
ROI = (Revenue - Costs) / Costs
To get the ROI as a Percentage, multiple by 100:
ROI = [(Revenue - Costs) / Costs] * 100
As an example, lets say "Company A1" earns $1,000 in revenue, and has costs of $750. Company A1's return on investment would be 33.3%.