Why Financial Metrics Matter
Whether you're a startup founder or an investor, objective financial metrics are essential for evaluating business profitability. "If I invest 100M KRW, how much will I earn?" — ROI, NPV, and IRR each answer this from different perspectives.
ROI (Return on Investment)
The most intuitive metric — the ratio of profit to investment cost.
ROI = (Net Profit ÷ Investment Cost) × 100%
| Project | Investment | 3-Year Profit | ROI |
|---|---|---|---|
| Mobile App Dev | 50M KRW | 80M KRW | 160% |
| Cafe Business | 100M KRW | 40M KRW | 40% |
| Real Estate | 300M KRW | 60M KRW | 20% |
Pros: Simple and intuitive. Cons: Ignores time value of money; hard to compare projects of different durations.
📈 ROI Calculator Calculate return on investment instantly →NPV (Net Present Value)
The sum of future cash flows discounted to present value, minus the initial investment. It accounts for the time value of money.
NPV = Σ [CFt ÷ (1+r)^t] - Initial Investment
NPV Calculation Example
100M KRW initial investment, 10% discount rate, 30M KRW annual return for 5 years:
| Year | Cash Flow | PV Factor | Present Value |
|---|---|---|---|
| 0 | -100M | 1.000 | -100M |
| 1 | 30M | 0.909 | 27.27M |
| 2 | 30M | 0.826 | 24.79M |
| 3 | 30M | 0.751 | 22.54M |
| 4 | 30M | 0.683 | 20.49M |
| 5 | 30M | 0.621 | 18.63M |
| NPV | +13.72M KRW | ||
NPV > 0 means the investment is worthwhile. NPV < 0 means it's better to pass.
💎 NPV Calculator Evaluate investment value with net present value →