What is ROI and how is it calculated?
Return on Investment (ROI) measures the profitability of an investment relative to its cost. The formula is: ROI = (Net Gain ÷ Cost) × 100. A $5,000 investment that returns $15,000 in revenue has a net gain of $10,000 and an ROI of 200%.
What is a good ROI for a business?
A 'good' ROI depends on the type of investment and industry. Digital marketing campaigns often target 300–500% ROI. Real estate typically targets 8–12% annual ROI. Stock market benchmarks average roughly 7–10% per year. For any investment, compare your ROI to alternative uses of the capital.
What is the difference between ROI and annualized ROI?
Standard ROI shows total return over the entire investment period. Annualized ROI normalizes that return to a 12-month period so you can compare investments of different durations on equal footing. A 50% ROI over 6 months equals a 100% annualized ROI.
Does this calculator account for taxes?
No — this calculator uses pre-tax figures. Your actual after-tax ROI will be lower depending on your marginal tax rate and jurisdiction. Consult a tax professional or accountant for tax-adjusted return calculations.