Profit & Margin
ROI Calculator
Work out the return on an investment and how fast it pays back.
ROI Calculator
All math runs locally in your browser. Nothing is uploaded.
How it works
Return on investment compares what you got out against what you put in. A $15,000 gain on a $10,000 cost means you made $5,000, which is a 50% return.
ROI is a quick sanity check for any purchase decision, but it ignores time. Two investments with the same ROI are very different if one took one year and the other took ten, which is why the payback period section sits on the same page.
Formula
ROI = (Gain − Cost) / Cost
Payback period = Initial investment / Annual net cash flow.
Worked example
Example: you buy equipment for $10,000 and it generates $15,000 in added sales. ROI = (15000 − 10000) / 10000 = 50%. If it brings in $2,500 net per year, the payback period is 4 years.
WORKED EXAMPLE — DEFAULT INPUTS
What to know
A plain ROI figure says nothing about time, which is why a one-year 50% return and a five-year 50% return are completely different results. The annualized version applies the compound growth formula to the total return over the holding years, giving you a per-year number you can compare with any other investment.
Most investors think in annualized terms: cash earns 4-5%, index funds historically earn more, and riskier plays must promise meaningfully higher annualized returns to be worth it. Quote the annualized number, not just the total.
Payback Period Calculator
The payback period is how long until cumulative cash flow covers the upfront cost. It is easy to explain and useful as a risk filter, but it ignores cash flows after the payback date and the time value of money.
Payback Period Calculator
All math runs locally in your browser. Nothing is uploaded.
FAQ
How is ROI different from profit?
Profit is the absolute dollar amount earned. ROI is that profit divided by what you risked, which lets you compare investments of different sizes.
Does ROI account for time?
Not by itself. The payback period and a per-year view are what make ROI comparable across different holding periods.
What is a good ROI?
It depends on risk. Cash-equivalent returns around 4-6% are fine for low risk; higher-risk projects should demand meaningfully higher returns to compensate.
How long is the payback period?
Divide the initial cost by the annual net cash flow. A $10,000 cost with $2,500 a year pays back in 4 years, ignoring the time value of money.