Question 1

What is ROI and how is it calculated?

Accepted Answer

ROI (Return on Investment) measures the profitability of an investment as a percentage. The basic formula is: ROI = ((Net Profit) / Investment Cost) x 100. For example, if you invest $10,000 and earn $15,000 in return, your net profit is $5,000 and your ROI is 50%. A positive ROI means you made money; a negative ROI means you lost money.

Question 2

What is the difference between ROI and ROAS?

Accepted Answer

ROI (Return on Investment) measures overall profitability including all costs, while ROAS (Return on Ad Spend) specifically measures revenue generated per dollar of advertising spend. ROAS = Revenue / Ad Spend. For example, if you spend $1,000 on ads and generate $5,000 in revenue, your ROAS is 5x (or 500%). ROAS does not account for cost of goods or other expenses, making it a top-line metric rather than a profitability metric.

Question 3

What is annualized ROI and why does it matter?

Accepted Answer

Annualized ROI converts a total return over any time period into an equivalent annual rate, so you can compare investments with different durations fairly. For example, a 50% total ROI over 3 years is roughly 14.5% annualized — very different from 50% in one year. The formula uses compound annual growth rate (CAGR): ((1 + ROI/100) ^ (1/years) - 1) x 100.

Question 4

How does compound growth work in the investment calculator?

Accepted Answer

Compound growth means your returns generate their own returns over time. If you invest $10,000 with a 10% annual return, after year 1 you have $11,000. In year 2, you earn 10% on $11,000 (not just the original $10,000), giving you $12,100. This snowball effect is why compound growth is so powerful over long periods. Our calculator shows you year-by-year growth including the compound effect.

Question 5

What is a good ROI percentage?

Accepted Answer

A 'good' ROI depends on the context. For stock market investments, the historical average annual return of the S&P 500 is about 10%. For marketing campaigns, most businesses target a minimum 5:1 ROAS (500% return). For business projects, anything above your cost of capital (typically 8-15%) is generally considered positive. The key is comparing your ROI against your alternatives and industry benchmarks.

Question 6

Can I compare multiple scenarios at once?

Accepted Answer

Yes! Use the Scenario Comparison feature in any mode. Enter up to 3 different sets of inputs and instantly see all results side by side in a comparison table. This is ideal for evaluating multiple investment options, comparing different marketing campaigns, or stress-testing projections.

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