Use this ROI and mean calculator to compute return on investment and average value in one place. Covers simple and annualized ROI variants alongside weighted and standard mean calculations.
Use template ->What is ROI?
Return on investment is a ratio that expresses the net gain from an investment relative to its cost. It is one of the most commonly used financial metrics because it provides a normalized way to compare the profitability of different investments regardless of their absolute size.
Its simplicity is both a strength and a limitation. ROI is easy to calculate and easy to communicate, but it says nothing about risk, timing, or the opportunity cost of the capital deployed. It works best as a quick screening tool rather than a complete investment evaluation.
ROI formula
ROI = (Net Gain / Cost of Investment) × 100
Annualized ROI = [(1 + ROI)^(1/n) − 1] × 100, where n is the number of years.
The annualized variant is important for multi-year comparisons. A 50% simple return over five years is not the same as a 50% return over one year, and the difference becomes significant when comparing investments with different holding periods.
How the ROI and mean calculator works
The calculator handles both simple and annualized ROI. Annualized variants can look very different from simple returns over the same period, particularly for longer holding periods, so the framing around the number matters as much as the calculation itself.
Mean sits alongside ROI for situations where distribution summaries and return calculations appear together in the same review. Mean output gains context when read alongside count and, where relevant, weighted contribution. A single average often obscures more than it reveals unless the underlying spread is visible alongside it.
How ROI is used in business and investment analysis
ROI is used in capital budgeting, marketing analytics, project evaluation, and investment comparison. In marketing, it measures the return on campaign spend. In operations, it evaluates process improvement investments. In finance, it serves as a quick benchmark before more sophisticated analysis. Its value is in providing a common denominator across very different types of investments, not in replacing more rigorous metrics.