1. What is an ROI Calculator?

Definition: This calculator measures the return on investment percentage based on the financial return and cost of an investment.

Purpose: It helps investors, business owners, and financial analysts evaluate the profitability of investments.

2. How Does the ROI Calculator Work?

The calculator uses the formula:

Where:

• \( ROI \) — Return on investment (percentage)
• \( R \) — Total return from investment (currency)
• \( C \) — Total cost of investment (currency)

Explanation: The formula calculates the percentage gain or loss relative to the investment's cost.

3. Importance of ROI Calculation

Details: ROI helps compare investment efficiency, make business decisions, and evaluate financial performance.

4. Using the Calculator

Tips: Enter the total return and total cost in USD. Cost must be greater than 0.

5. Frequently Asked Questions (FAQ)

Q1: What does a positive ROI mean?
A: A positive ROI indicates profit (return exceeds cost), while negative shows a loss.

Q2: What's considered a good ROI?
A: This varies by industry, but generally 10-20% is good for most businesses.

Q3: Can ROI exceed 100%?
A: Yes, when returns more than double the investment cost.

Q4: Does ROI consider time?
A: Basic ROI doesn't; for time-adjusted returns, use Annualized ROI.

Q5: How is ROI different from profit margin?
A: ROI measures investment efficiency, while profit margin measures operational efficiency.