Q:

What is the formula to calculate return on investment?

A:

Quick Answer

The formula to calculate return on investment is ROI = (gain from investment - cost of investment) / cost of investment. The subsequent result is expressed as a ratio or a percentage.

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What is the formula to calculate return on investment?
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Full Answer

The ROI formula is used to evaluate the efficiency of an investment. The ROI metric is popular among investors and businesspeople, largely because of its simplicity and versatility. A negative ROI or the presence of alternative investments with higher ROIs indicates that the investment should not be undertaken. The ROI formula can be applied to virtually any form of investment, from individual investments to projects within a corporation.

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