What is Return On Investment (ROI)? How Do You Calculate It?

Return on investment (ROI) is the relationship between net revenue and investment cost in an asset and illustrates whether the investor’s asset has appreciated or depreciated. By looking at this figure, the investor can assess whether their investment has met their target and reflect on what to do in the future.

Working out the return on investment (ROI) also allows investors to find out how efficient an investment is and compare it to other investment options.

How do you calculate return on investment (ROI)?

You can calculate ROI using the following formula:

ROI (%) = (current value of investment — initial cost of investment) ÷ initial cost of investment x 100

Subtracting from the initial cost of the investment from the present value of the investment (or price it is sold at) will give you the net revenue. Dividing this net revenue by the initial cost of the investment will give the return on the investment. Multiplying this figure by 100 will then give you the ROI as a percentage.

If the ROI is over 100%, then the investment has generated a profit. If it is below 100% then the investor has made a loss.

Here’s an example. If the ROI is 120% then this means that an initial investment of 100 units was sold by the investor for 120 units. This equates to a profit of 20%.

If the ROI is 70% then this means an initial investment of 100 units was sold by the investor for 70 units. A loss of 30%.

What are the benefits of calculating a return on investment (ROI)?

  • A way to determine profit or loss
  • An easy calculation
  • A way to predict the future trajectory of an asset
  • Good data to support decisions on an investment strategy

The BtcTurk | PRO Profit/Loss page

On BtcTurk | PRO there is a Profit/Loss page where you can find the profit/loss status of your cryptocurrency trades, both altogether and individually for each cryptocurrency. You can access your profit/loss date by clicking Profit/Loss under the account menu.

You can get an idea of whether you’re making a profit or loss currently by looking at the potential profit/loss data. It will show you what would happen if you were to sell your cryptocurrency assets are sold at the current market price.

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BtcTurk

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Join over 4.7 million others from 7 continents. Trade Bitcoin and 55 other cryptocurrencies in 136 pairs on our desktop and mobile app!

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