Upload

Loading icon Loading...

This video is unavailable.

How to Calculate ROI (Return on Investment)

Sign in to YouTube

Sign in with your Google Account (YouTube, Google+, Gmail, Orkut, Picasa, or Chrome) to like Howcast's video.

Sign in to YouTube

Sign in with your Google Account (YouTube, Google+, Gmail, Orkut, Picasa, or Chrome) to dislike Howcast's video.

Sign in to YouTube

Sign in with your Google Account (YouTube, Google+, Gmail, Orkut, Picasa, or Chrome) to add Howcast's video to your playlist.

Uploaded on Mar 3, 2011

Create Cake Magic! Learn to make the cakes you've always dreamed of with online courses from CakeMade. http://bit.ly/1st0Roh

Watch more How to Start a Business videos: http://www.howcast.com/videos/396537-...

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.


Step 1: Determine net profit
Determine the company's net profit, also known as net earnings.

Tip
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 $100,000 and the total invested is $300,000, then the return on investment would be 33 percent.

Step 4: Compute stock ROI
Compute the return on stock investments with a variation of the basic formula.

Step 5: Find the value
Imagine you invest $5,000 in a company. One year later, the stock's value has risen to $5,200 and you earn $100 in dividends. Use the new formula to calculate your ROI at 6 percent.

Did You Know?
In 1919, the DuPont company developed their own ROI formula, known as the DuPont Formula.

Loading icon Loading...

Loading icon Loading...

Loading icon Loading...

The interactive transcript could not be loaded.

Loading icon Loading...

Loading icon Loading...

Ratings have been disabled for this video.
Rating is available when the video has been rented.
This feature is not available right now. Please try again later.

Loading icon Loading...

Advertisement
Loading...
Working...
to add this to Watch Later

Add to