Investment Details
ROI
50.00%
Net Profit
$5,000
Annualized ROI
50.00%
What is ROI?
Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment. It compares the magnitude and timing of gains from investment directly to the magnitude and timing of investment costs.
ROI Formula
ROI = ((Amount Returned - Amount Invested) / Amount Invested) × 100
Interpreting ROI
- Positive ROI: Investment was profitable
- Negative ROI: Investment resulted in a loss
- Zero ROI: Broke even - no profit or loss
- Annualized ROI: Normalizes returns for comparison across different time periods
Limitations of ROI
- Doesn't account for time value of money
- Doesn't consider investment risk
- Can be manipulated by changing the time period measured