Monetary Calculation

Calculating a tangible, monetary return on investment requires you to subtract the amount of an investment from the revenues produced and divide that number by the investment. This is represented as Gain from Investment minus Investment divided by Investment. For example, if you buy $1,000 worth of inventory and sell the inventory for $5,000, your gross return on your investment is $4,000. To get your percentage ROI, the calculation would be $5,000 minus $1,000 divided by $1,000, giving you a return of four times your investment, or a 400 percent return on your investment. To get your net return on investment, you must subtract taxes paid on the $4,000. If you borrowed the $1,000 investment, you would also need to calculate the amount of interest you paid on it while you sold the inventory.

Intangible ROIs

References

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