How to Calculate ROI (Return on Investment)

In this video, we’ll be showing you how to calculate ROI (Return on Investment) in Excel.

ROI is a popular metric used to determine how good an investment is by comparing the initial value of the investment with the final value and getting a percentage change from that. ROI might sound complicated, but it’s very easy to calculate and is essentially a percentage increase function with some fancy labels. Let’s go ahead and make an ROI calculator in Excel.

We have three columns: Cost of Investment, Final Value (of the investment), and ROI. I’ve labeled the first column cost of investment instead of initial value so if there are any extra costs involved in the investment like taxes or travel you can add them in this column and the calculation will still work.
1. Click the top cell in ROI.
2. We are going to subtract the Cost of the Investment from the Final Value and then divide that difference by the Cost using this formula: =(C7-B7)/B7.
3. The value we get is 1 which is a correct ratio, but ROI makes more sense in percentages so select the cell again and click the Percentage Style button at the top.
4. Now we can hover the mouse over the bottom-right handle of the cell and drag it down to copy.

Remember to add any extra costs for the investment in the first column to get a more accurate ROI.

❓💬 What other business calculations do you want to learn? Let us know in the comments below.

#HowTech #Excel
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