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Return of Investment Calculator: What is It and How to Use One?

Submitted by SpdLoad on Thu, 04/18/2024 - 12:03

In finance, Return on Investment (ROI) gauges an investment's potential profitability, expressed as a percentage relative to its initial cost. An ROI calculator simplifies this assessment, aiding quick evaluations of various investment opportunities.

How to Use the ROI Calculator?
ROI, a fundamental metric, measures gain or loss compared to the initial cost. The basic formula is ROI = (Total Investment / Net Profit) × 100%. For instance, investing $50,000 in a dating app development yielding $70,000 profits results in a 40% ROI.

Factors to Consider Beyond Basic ROI Calculation:
Consider timeframes, net vs. gross ROI, opportunity costs, risk levels, inflation, taxes, non-monetary benefits, industry-specific factors, and exit strategies when evaluating ROI.