How to Calculate ROI

Maintained by Prince Yadav — Founder & Lead Developer, Ganitra Calculator. This guide is written and maintained as part of Ganitra Calculator’s first-party educational content.

The basic idea

ROI compares the gain or loss from an investment with the amount originally invested.

The formula

ROI = (Final Value − Initial Investment) / Initial Investment × 100.

Interpreting ROI

A positive ROI indicates a gain and a negative ROI indicates a loss. ROI alone does not show how long the investment took or account for every cost.

ROI and time

Two projects can have the same ROI but very different durations. Basic ROI does not annualize the result, so time should be considered separately.

ROI and costs

A meaningful ROI calculation should use a consistent definition of the initial investment and final value. Fees, taxes, operating costs, and other expenses can affect real-world return.

Worked example

If an investment starts at $10,000 and ends at $12,000, the gain is $2,000 and basic ROI is 20%. That 20% does not tell you whether the investment took one year or ten years.

When another metric helps

CAGR or other annualized measures can help compare returns across different holding periods. Cash-flow-heavy projects may also require NPV or IRR.

Using the calculator

Enter consistent initial and final values, then interpret the percentage alongside the time period and costs that matter.

Related Calculators

Use the Calculator

Take the concepts from this guide and test your own assumptions in the calculator.