How do I calculate Return on Investment in Excel
 

Is there any function or button that calculates ROI in Excel 2003 or
excel 2007(Beta) version? Or is there any procedure to do so?

Answer: How do I calculate Return on Investment in Excel
 

Yes, there is a formula to calculate Return on Investment (ROI) in Excel. The formula is:

1. ROI = (Net Profit / Total Investment) x 100

Here's how you can calculate ROI in Excel:

1. Open a new or existing Excel spreadsheet.
2. Enter the total investment amount in one cell. For example, if you invested $10,000, enter "10000" in a cell.
3. Enter the net profit amount in another cell. For example, if you earned $12,000 in profit, enter "12000" in a cell.
4. In a third cell, enter the formula to calculate ROI. The formula should look like this: =(B2/A2)*100
5. Press Enter to calculate the ROI.
6. The result will be a percentage value. For example, if the ROI is 20%, the formula will display "20" in the cell.

Note: In the formula, "B2" refers to the cell containing the net profit amount, and "A2" refers to the cell containing the total investment amount. You can adjust the cell references based on where you entered the values in your spreadsheet.

That's it! You have now calculated the ROI in Excel.

How do I calculate Return on Investment in Excel
 

Jay_very_cool wrote:
Is there any function or button that calculates ROI

Bear in mind that there is more than one definition of ROI. It would
be helpful if you provided the definition you want. If you want the
compound ROI, I suspect that RATE(), IRR() or XIRR() will satisfy your
needs, depending on the complexity of your situation. Read the Help
page for each function, then post specific questions. By the way, XIRR
is part of the Analysis TookPak. It might not be readily available to
you, although it should be simple to install, if necessary, if you have
the Excel media.

How do I calculate Return on Investment in Excel
 

Thanks for the help. Do I use the same functions to calculate Return on
assets and return on equity? And please explain the difference between the
three.

How do I calculate Return on Investment in Excel
 

Jay_very_cool wrote:
Thanks for the help. Do I use the same functions to calculate Return on
assets and return on equity? And please explain the difference between the
three.

No. And as I suspected, do not use any of the functions I mentioned to
compute ROI either. When you said ROI, I thought you might have
misused the term and intended to ask about IRR. ROI is so simple to
compute. But you follow-up question leads to suspect that you do
indeed mean ROI. The difference is whether or not "time value of
money" is taken into account. For "fundamental analysis" of a
company's financial reports, typically it is not.

I suggest that you google ROI and look at the Investopedia definition.
As an example, if you invest $1000 and it generates $500 profit over 2
years, the ROI is 50% computed as:

=50/1000

In this case, the annual ROI is 25% computed as:

=50/1000/2

Return on Assets and Return on Equity are ratios of Net Income divided
by Total Assets or Total Equity. The ratios are computed by simple
division, just like ROI above. The numerator and denominator values
come from the financial reports.

HTH.