Business
How to Calculate ROI (Return on Investment): Guide with Formulas
Just ask and get Editorial Team(Business Finance)
Updated 2026-09-19
6 min read
Key Takeaway:Evaluate capital investments, marketing campaigns, and real estate purchases with clear Return on Investment metrics.
What is ROI?
Return on Investment (ROI) is a universal financial metric used to evaluate the efficiency and profitability of an investment relative to its upfront cost.
The Standard ROI Formula
$$\text{ROI} = \left(\frac{\text{Net Profit}}{\text{Cost of Investment}}\right) \times 100 = \left(\frac{\text{Final Value} - \text{Cost}}{\text{Cost}}\right) \times 100$$
Frequently Asked Questions
Can ROI be negative?
Yes. If an investment returns less than its original purchase cost, the net profit is negative, indicating a financial loss.