# How to Calculate ROI (Return on Investment)

how to calculate ROI return on investment or ROI is the overall profit made on an investment expressed as a percentage of the amount invested one of the most important gauges of business success learn how to figure out your ROI you will need basic math skills and a pen and paper or a calculator step 1 determine the company’s net profit also known as net earnings make sure not to confuse net profit with gross revenue step 2 calculate the total investment which can be found by adding total debt to total equity step 3 divide the net profit by the total investment and multiply by 100 to find the basic return on investment if the net profit is \$100,000 and the total invested is \$300,000 then the return on investment would be 33% step 4 compute the return on stock investments with a variation of the basic formula step 5 imagine you invest \$5,000 in a company one year later the stocks value has risen to \$5,200 and you earn \$100 in dividends use the new formula to calculate your ROI at 6% did you know in 1919 the DuPont company developed their own ROI formula known as the DuPont formula

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