Finance

Business Return on Investment Calculator (5 Years)

Calculate return on investment as a percentage. This business version uses a 5-year planning term as its starting point.

In plain terms, the Return figure is the total gain on the amount invested over the whole 5 years, so a positive figure means the final value ended higher than the amount invested, and a negative figure would mean it ended lower.

Formula

Return equals final value minus invested amount, divided by invested amount, times 100.

How it works

A positive return means the final value is higher than the amount invested.

Worked example

Amount invested $10,000, final value $15,000, term 5 years. First, the gain is $15,000 minus $10,000, which is $5,000. Using the page formula, return is $5,000 divided by $10,000, times 100, which is 50.00%. That is the total return over the whole 5 years, not a yearly rate. As an illustration only, not the output of this page, the annualised rate behind the same result is about 8.45% a year, because $15,000 divided by $10,000 is 1.50, and the 5th root of 1.50 is about 1.0845.

Who this term suits for a business: a new cafe, shop, or small workshop judging its first big spend, for example new ovens, a delivery bike, or an opening marketing campaign, where the owner needs to know whether the money came back within one short trading cycle rather than guessing from one busy month.

FAQs

What is a good ROI?
There is no single good figure. Compare returns over the same period and with the same risk before deciding.

Is this business calculator exact?
No, it is an estimate for planning only, based on the numbers you enter.

Are these figures financial advice?
No, they are estimates for planning only, not financial advice. Check with a qualified adviser for decisions involving large sums.

Is 50.00% over 5 years a good return for a business?
For a small business it is a strong total return, but judge it against the risk and the borrowing cost. If the business borrowed at a high rate or tied up cash it needed for stock, 50.00% over 5 years, about 8.45% a year as an illustration only, may still be too little.

What does 50.00% over 5 years mean a year?
It means the total gain over the whole 5 years is 50.00%, not 50.00% every year. As an illustration only, not the output of this page, the annualised rate behind the same result is about 8.45% a year, because 1.50 to the power of one over 5 is about 1.0845.

Should a business expand after 5 years just because ROI hit 50%?
No, not on this figure alone. Check whether the gain came from one good year, whether running costs rose, and whether the same money would earn more in a second outlet, extra staff, or paying down a loan before committing to expansion.

Estimates only, not financial advice. Figures are approximate and do not include all fees, taxes, or changing rates unless stated.