How to use our return on investment calculator
ROI and other cash flow metrics, such as NPV (net present value), and IRR (internal rate of return) are used to evaluate the appeal of business investments. However, calculating ROI can be complicated and time-consuming. We have created a straightforward ROI calculator to help you correctly estimate future investment gains.
Calculating ROI is essential for all businesses, regardless of industry. Textmagic’s ROI percentage calculator will give you all the information you need. Just follow the instructions below:
- Step #1 - In the first text box, enter the total amount of money that has been invested.
- Step #2 - In the next text box, enter the total amount of funds that have been returned.
- Step #3 - Choose whether the data you provide is for a particular period of time. If you prefer, you can select a specific date range.
- Step #4 - Enter either the number of years of your investment or the date range for which you want to measure.
Lastly, click the green “Calculate” button and allow Textmagic’s return on investment calculator to do the rest. Within just a few moments, your report will be displayed.
Textmagic’s simple rate of return calculator will show you your potential:
- Investment gain;
- ROI (return on investment);
- Annualized ROI;
- Investment length.
Our ROI calculator will also generate a pie chart to give you a better understanding of the investment and profitability percentages.
Once you have reviewed the results, you can download and save your data or obtain a shareable link.
Why you Should Use our Free ROI Calculator
Return on investment calculators are useful for growing businesses and investors. Knowing your ROI can help you determine how much money you have made and set the stage for future business plans. Textmagic’s ROI calculator is simple to use and provides accurate results you can trust in just a few seconds.
Benefits of Calculating Return on Investment
ROI is a relatively uncomplicated key performance indicator. As long as the calculations yield a positive figure, your investments are solid. However, if the calculations result in a negative number, this means total costs will exceed your returns.
Calculating your return on investment using an ROI percentage calculator can:
- Provide insight on the estimated surplus of net investments;
- Help decide between multiple investment options by comparing ROI value to LV, which is the predefined limit value;
- Ensure that assets will only be acquired as long as they give returns that are aligned with your company’s financial goals;
- Help you make investments that will enhance organisational and divisional profit performance;
- Help you gauge the effectiveness of different branches or departments and achieve goal congruence;
- Determine whether investing in new equipment is a good idea.
Why we created this tool
Investing money frivolously is never a good idea, especially in business. As a business owner, you need the necessary tools to properly assess your projected revenue or costs and make decisions that will push your company forward.
We created this free business and marketing ROI calculator to provide quick, easy access to one of the most fundamental business calculations.
Frequently Asked Questions
What is return on investment (ROI)?
Return on investment is a key performance indicator that determines whether a particular investment has been (or can be) profitable. It is often used as a forecasting tool to ascertain whether a specific investment will be worthwhile.
Before that investment has been made, it can also show whether particular marketing strategies or other business ventures have performed as expected.
How to calculate ROI correctly?
Return on investment is calculated by subtracting the initial investment from the investment return amount and dividing this figure by the initial investment amount. The sum of this calculation is then multiplied by 100 to create a percentage value.
How to calculate ROI correctly?
Return on investment is calculated by subtracting the initial investment from the investment return amount and dividing this figure by the initial investment amount. The sum of this calculation is then multiplied by 100 to create a percentage value.
What are the limitations of ROI?
ROI, as a metric, has several drawbacks that you should be aware of:
- Simply calculating ROI may not be sufficient in choosing between worthwhile investments.
- Some investments may not have very high ROI, but can still add value to the company. Performance-focused managers may end up choosing investments simply based on their high ROI value.
- There are multiple concepts that help define profit, such as profit before/after interest and tax, controllable profit, etc.
- Different companies have different accounting policies, which may also lead to incorrect ROI calculation.
- Lastly, and probably most importantly, the return on investment formula doesn’t take into account the changes in the value of money over time. This makes it hard to compare different investments. Luckily, calculating annual return on investment can help solve this problem.
