How to Calculate ROI
Return on Investment (ROI) is one of the most widely used financial metrics. The formula is simple: ROI = ((Net Profit) / Cost of Investment) × 100. A positive ROI means you made money; a negative ROI means you lost money. While ROI is useful for quick comparisons, remember that it doesn't account for the time period of the investment. An ROI of 50% over 10 years is very different from 50% over 1 year. For time-adjusted returns, consider using annualized ROI or IRR (Internal Rate of Return).