Return on an Investment
A $10,000 investment returning $15,000 is a 50% ROI — $5,000 net profit, a 1.5x multiple. ROI is the universal first screen for any spend, from equipment to marketing.
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Results
Visualization
Cashbizly provides illustrative business estimates only. Results depend on your inputs and assumptions and are not accounting, tax, or legal advice. Consult a CPA or financial advisor before major decisions. Tax-year figures (mileage, QBI, SEP, etc.) are labelled by year and should be verified at IRS.gov.
How It Works
ROI% = (Gain - Cost) / Cost x 100. It is simple and universal but ignores time (a 50% ROI in a month beats 50% in ten years). For time-aware decisions use NPV or IRR. This is the baseline corporate-finance return metric.
What Should You Do?
Scenario 1: the same $5k profit over 5 years is far weaker than over 1 year — ROI alone hides that. Scenario 2: compare two projects by ROI first, then timing. Scenario 3: include all costs (not just sticker price) for an honest ROI.
Frequently Asked Questions
Does ROI consider time?
No — that is its main weakness. Use NPV/IRR when timing matters.
Gain or revenue?
Use net gain (revenue minus costs), not top-line revenue, or ROI is overstated.
What ROI is good?
Depends on risk and alternatives; compare to your cost of capital and other projects.
Authoritative References
- Investopedia — ROI — ROI formula and limitations.
- Corporate Finance Institute — ROI — ROI vs other return metrics.