ROI Calculator
Calculate return on investment (ROI).
Overview
The ROI (Return on Investment) Calculator measures the profitability of an investment relative to its cost. It expresses gain or loss as a percentage, making it essential for comparing different investment opportunities and evaluating business performance.
Formula
ROI (%) = ((Net Profit − Investment Cost) ÷ Investment Cost) × 100 Net Profit = Total Returns − Total Costs
How to Use
- 1Enter the initial investment amount.
- 2Enter the total returns (or expected returns) from the investment.
- 3Click 'Calculate' to see the ROI percentage.
- 4Compare ROI across different investment options to make informed decisions.
Examples
KRW 10M Investment, KRW 2M Profit
Investing KRW 10 million and earning KRW 2 million net profit over 1 year
KRW 50M Investment, KRW 45M Recovery (Loss)
Investing KRW 50 million with total recovery of KRW 45 million
Background
ROI (Return on Investment) is the most universally used financial metric for measuring returns relative to investment cost. Since DuPont systematically adopted it for performance analysis in the 1920s, ROI has been applied across corporate investment decisions, marketing effectiveness analysis, real estate evaluation, and more. The primary limitation of ROI is that it does not account for the investment time horizon; a 20% ROI over one year is vastly different from 20% over five years. To address this, annualized ROI, IRR (Internal Rate of Return), and ROAS (Return on Ad Spend) are commonly used as complementary metrics.
Tips
- ✔A positive ROI indicates a gain; a negative ROI indicates a loss.
- ✔Consider annualized ROI to account for different investment time horizons.
- ✔Factor in opportunity cost — what you could have earned investing elsewhere.
- ✔Include taxes and fees for a more realistic ROI figure.
- ✔A high short-term ROI may carry higher long-term risk.
FAQ
Q. What is a good ROI?
It varies by industry and investment type, but generally an annual ROI above 10% is considered favorable. The long-term average stock market return is around 7–10% per year.
Q. What is the difference between ROI and ROAS?
ROI measures net profit relative to total investment cost, while ROAS (Return on Ad Spend) measures revenue relative to advertising spend. ROAS is primarily used to gauge marketing efficiency.
Q. What are the limitations of ROI?
ROI does not account for the time period of an investment. A 20% ROI over one year is very different from 20% over five years. Use annualized ROI or IRR for time-adjusted comparisons.
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