Return on Investment ROI Formula – ROI Calculator

Here you will explore how to calculate return on investment and find ROI calculator. Return on investment ratio does allow to estimate profitability of the investment, or percentage of profit which is earned on this certain level of investments. This ratio can be used on the whole business level or on a separate investment level.

The following ROI formula is used for ROI calculation purpose:

ROI = Profit from Investment / Investment

This ratio also you to understand how to calculate ROI and allows to compare profitability of separate investment projects among each other. Profit from investment usually means the difference between revenue earned from investment and cost incurred to earn those revenue.

Of course it is essential to use same data for calculation in order to eliminate possible misstatements in results and consequently interpretation.

Also it is essential to remember that this simple ratio in the above Return on Investment formula does not take into account time value of money, which can be very important for those investment projects, which do have long duration. In such case this return on investment calculator can be combined with other ratios, which do eliminate this deficiency.

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