Investment
Return on investment
Net return divided by cost basis. A negative numerator means the investment lost money, and ROI comes out negative.
The Formula
ROI = (Current Value - Cost) / Cost x 100%
Net return divided by cost basis. A negative numerator means the investment lost money, and ROI comes out negative.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| Cost | Total cost basis | currency | Purchase price plus commissions, closing costs, improvements and mandatory carrying costs. |
| Current Value | Ending value plus interim income | currency | Sale proceeds plus any dividends, rent or interest received while held. |
| x 100% | Percentage conversion | percent | Multiply the decimal result by 100 to read it as a percentage. |
What Each Symbol Means
Costcurrency
Total cost basis
Purchase price plus commissions, closing costs, improvements and mandatory carrying costs.
Current Valuecurrency
Ending value plus interim income
Sale proceeds plus any dividends, rent or interest received while held.
x 100%percent
Percentage conversion
Multiply the decimal result by 100 to read it as a percentage.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate roi page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate ROI, filed under Finance. Every number the guide produces comes from substituting into this one line.