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How to calculate ROI (Return On Investment):

Return on investment, or ROI, is the overall profit made on an investment expressed as a percentage of the amount invested -- one of the most important gauges of business success. Learn how to figure out your ROI.

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Steps

STEP 1
Determine net profit

  • Determine the company's net profit, also known as net earnings.
  • Make sure not to confuse net profit with gross revenue.

STEP 2

  • Calculate total investment
  • Calculate the total investment, which can be found by adding total debt to total equity.

STEP 3

  • Multiply by 100
  • Divide the net profit by the total investment and multiply by 100 to find the basic return on investment. If the net profit is Rs. 100,000 and the total invested is Rs.300,000, then the return on investment would be 33 percent.