Overview

Return on investment (ROI) is a financial metric intended for the measurement of benefits an investor receives for the amount of investment made. Generally, a higher ROI ratio is preferred for investors. The formulas for calculating ROI are as follows:

ROI = Net Income / Cost of Investment

or

ROI = Investment Gain / Investment Base

The ROI formula can be modified to account for the timing of investment:

Annualized ROI = [(Ending Value of Investment / Beginning Value of Investment)^(1 / # of Years)] - 1

Where # of Years = (Ending Date of Investment - Starting Date of Investment) / 365

Share
Reviews Add a review
No reviews yet

More From Corporate Finance Institute®

Browse our top rated business templates. See All
Energy Industry Comps Template Energy Industry Comps Template
713
44
This energy industry comps template provides a guideline and example of what a comparables universe would look like for a…
Financial Institution Dividend Discount Model
1,312
57
The financial institution dividend discount model uses future dividends to find the implied share price. This model is based on…
Loan Payment Calculator
968
0
The loan payment calculator allows users to determine the principal and interest payment each month until the full balance of…
DDM - Excel Dividend Discount Model Template
1,110
80
The dividend discount model template allows investors to value a company base on future dividend payments. This is based on…
Non-directional trading strategy template Non-directional Trading Strategies Template
954
0
The non-directional trading strategies template allow users to determine the profit when buying options. This template focuses on non-directional strategies…
restructuring financial model template preview 1 Restructuring Financial Model Template
1,265
0
This restructuring financial model template is used to demonstrate the financial interactions behind the restructuring process. Adjust this model to…
See All