Return on investment (ROI)

A printable cheatsheet with calculations
and notes

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Return on investment (ROI)

ROI =

(Gain from investment – cost of investment)

Cost of investment

AKA: opportunity cost

INTERPRETATION:

Return on investment (ROI) measures how much money was made (or lost) on a project or investment as a percentage of the purchase price.

Business owners, managers, and others use this ratio to measure how well a particular project or investment performed.

Note: expanded calculation

Subtract the cost from the total income and divide it by the total cost.

EXAMPLE

Investors and managers look at the same equation differently; investors might consider a company’s gross sales and all the expenses incurred to produce or sell its product. A manager might focus instead on net sales and the cost of goods sold.

For example, if a business owner invests money in an advertising campaign, he later calculates the ROI to be 200%. This means a ratio of 2:1; for every $1 invested into marketing, two additional dollars were generated.

BENCHMARK: EB, PG, ROT

Generally, if the money generated exceeds the amount spent, a business could consider it an acceptable ROI. If the calculation produces a zero means the investment would break even.

ROI :

ABBREVIATION KEY:

ROT: Rule of thumb
HA: Historical Average (organization’s historical average)
PG: Peer Group average
EB: Economic Benchmark

DISCLAIMER: The interactive calculators on this site are self-help tools intended to help you visualize and explore your financial information. They are not intended to replace the advice of a qualified professional. Because each business is different, we can not guarantee accuracy.