How to use the ROI Calculator: Measure Your Investment Success
The EzCalcy ROI Calculator determines the efficiency relative to the cost of an investment. Return on Investment (ROI) is the universal language of profitability, used to compare everything from a stock portfolio to a kitchen renovation.
Marketing ROI (ROAS)
For every $1 spent on ads, how much revenue did you get? A 5:1 ROAS means $5 revenue for every $1 spent.
Real Estate (Cap Rate)
Investors use ROI to measure rental yield and property appreciation against the mortgage interest and maintenance costs.
The Formula
Simple ROI vs. CAGR (Annualized)
Simple ROI is deceptive for long periods. A 50% return looks amazing, but if it took 10 years to achieve, that's only ~4% per year (CAGR). Always check the Annualized ROI to compare investments of different durations fairly.
| Investment | Duration | Total ROI | Annualized ROI |
|---|---|---|---|
| Scenario A | 1 Year | 20% | 20% |
| Scenario B | 5 Years | 20% | 3.7% |
ROI vs. IRR (Internal Rate of Return)
ROI is simple but flawed—it ignores the timing of cash flows. IRR is more complex but accurate. If you receive $1,000 today vs $1,000 in ten years, the ROI is valid but the IRR is vastly different because money today is worth more than money tomorrow.