Business ROI Calculator
Calculate the return on a business investment — total ROI and annualized ROI — including ongoing profit and any exit value over your holding period.
Return on investment
Enter an initial investment greater than zero.
What is a business ROI calculator?
Return on investment (ROI) measures how much you gain relative to what you put in. This calculator works out the ROI of a business investment across a holding period, combining the profit the business generates each year with any value you realise when you exit.
How is ROI calculated?
- Total investment = Initial + Additional investment
- Total return = (Annual profit × Years) + Exit value
- Net return = Total return − Total investment
- ROI % = Net return ÷ Total investment × 100
- Annualized ROI = ((Total return ÷ Total investment)^(1 ÷ Years) − 1) × 100
You can enter the period in months or years, and provide annual profit directly or let the calculator derive it from revenue minus operating costs.
Why annualized ROI matters
A 60% total ROI over five years is very different from 60% in one year. Annualized ROI puts returns on a common yearly basis so you can compare opportunities of different lengths, and against passive alternatives.
Example
You invest $100,000, the business earns $25,000 profit a year for four years, and you sell for $50,000. Total return is $150,000, net return is $50,000, and ROI is 50% — an annualized ROI of roughly 10.7%.
Who should use it
- Owners weighing whether to invest more in the business.
- Buyers comparing acquisition opportunities.
- Anyone evaluating a project or expansion.
Related calculators
Pair this with the business profit calculator to estimate annual profit, the business valuation calculator for exit value, and the break-even calculator to plan the path to profitability.
Frequently asked questions
How do you calculate ROI?
ROI = (Net Return ÷ Total Investment) × 100. Net return is your total return (cumulative profit plus any exit value) minus what you invested. A $50,000 gain on a $100,000 investment is a 50% ROI.
What is annualized ROI?
Annualized ROI expresses the return as an equivalent yearly rate, so you can compare investments held for different lengths of time. It is calculated like a compound growth rate over the holding period.
What is a good ROI for a business?
It depends on risk and alternatives, but many business investments target well above the returns of passive options. Compare the annualized ROI to what you could earn elsewhere at similar risk.
Should I include exit value?
Yes, if you expect to sell the business or asset. Exit value is added to your cumulative profit to form the total return, which can dominate ROI for shorter holding periods.
Related calculators
Business Profit
Turn revenue and expenses into gross, operating and net profit with clear margins and a visual breakdown.
Business Valuation
Estimate your company's value with revenue, EBITDA and SDE multiples, adjusted for growth and risk.
Break-Even
Find the units and revenue you need to cover costs and reach a target profit.
Disclaimer. This calculator provides estimates for informational purposes only. Results are based on the information you enter and the assumptions used by the calculator. Actual financial, tax, business valuation, lending, marketplace or investment outcomes may differ. Consider consulting a qualified professional for decisions involving significant amounts of money. Past or projected returns do not guarantee future results.