## What is ROI?

ROI meaning is a return of investment. Relating to the investment costs, ROI measures the amount of return at a particular investment. Calculation of ROI is very simple and precise.

You can get the return on investment value by dividing the benefit of an investment by the cost of investment. The resulting figure is in the form of a percentage or ratio.

## What does return on investment mean?

ROI is a useful and popular metric due to its simplicity and versatility. The major thing concerned in investment is the profit gain from it. Hence ROI acts as a gauge to measure investment’s profitability.

It is a financial ratio that calculates the benefit an investor will receive over his investment.

ROI is a broad term that can be applied to any level of assessment such as ROI on a stock investment, Return on investment in real estate transactions and ROI can also be applied when a company expects on spreading the business or expanding its manufacturing line.

It is better to consider further opportunities with higher ROI’S are available. Likewise, while selecting the options you should avoid negative ROI’s. It will impose a net loss.

If you have any doubts about the calculation you can just use a return on investment calculator. It will help you to derive accurate results and save you from any loss.

## What is the formula for return on investment?

It is measured over net income divided by the original capital cost of investment. If the ROI ratio is greater, the greater benefit will be earned. The ROI formula is as follows:

It will allow you to compare with different investment rates. To simplify the calculation, you can use a return on investment calculator and get the result with a hundred percent accuracy. The ROI calculator will show the precise and accurate result.

## What is ROI in business?

In business, the return on investment is measured per period to evaluate the rates of return on money that is invested. Anyhow, if you have found ROI value low you can switch to another investment option.

Select the investment option that provides the largest ROI value. For large enterprises, it is better to calculate the ROI effectively so that the company avoids any mega loss.

To calculate ROI value efficiently and zero percentage of error, use return on investment calculator.

## ROI Example

Suppose Williams invested $ 1,000 in plastic trade corp in 2017 and sold his shares on stock for $1,200 one year later.

To calculate his ROI, he would divide his profits like ($1,200- $1,000 = $200) on investment cost ($1,000), for return on investment $200 over $1,000 or 20 percent.

Likewise, with this information, he can compare his investment in plastic trade with his other projects. Suppose William has also invested $2,000 in chocolate candy stores Inc. in 2015 and sold his shares for a total of $2, 800 in 2018.

The return on investment value on William’s holdings in a chocolate candy store would be $800/$2000 or forty percent. You can also calculate return on investment with a rate of return calculator.

## How to calculate return on investment?

Suppose if you have purchased a property that is valued at $500,000. And two years later, you have sold the property for $1,000,000.

The rate of return formula is:

Than your ROI value, in this case, will be:

$$\text{ROI}\;=\;\frac{1,000,000\;-\;500,000}{500,000}\;=\;1$$

This is a basic return on investment formula. If you have found yourself in doubt regarding this you can use the return on investment calculator.

## How to use return on investment calculator?

Using a return on investment calculator is a one minute process. You have to put the amount you invested, the amount which will return over it, and the period of this investment. I.e. For how many years have you chosen this investment plan? After putting the values on required bars you will get complete information regarding ROI. Besides, to show the ROI percentage it will tell you the investment gain and annualized ROI.