How to Calculate Return on Investment (ROI)?

Return on Investment - Definition, Formula, Example

Definition:

The profit to the investor resulting from an investment of some resource is known as return on investment.

Formula:

ROI = ( (Earnings) - Initial Invested Amount) / Initial Invested Amount) ) × 100

Example:

Assume the initial investment amount is 2,50,000 and return amount is 3,00,000.

Given,

Initial Investment Amount = 2,50,000
Return Amount =3,00,000

Solution

ROI = ((300000-250000 )/250000)*100
= (50000/250000)*100
= (0.2 *100)
= (20)

Result:

ROI is 20 %

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