Calculate Return on Investment (ROI)

Excel & Google Sheets

How it works

B2−A2 is the net gain: what came back minus what you put in. Dividing by A2 — the cost — expresses that gain relative to the investment, so a $5,000 spend returning $6,500 gives (6500−5000)/5000 = 0.3, or 30% ROI. A negative result means the investment lost money. Note the denominator: ROI divides by the cost, while profit margin divides by revenue — a 30% ROI and a 30% margin are different claims, so don't mix the two in one report. Format the result as a percentage.

B2-A2

The net gain: total return minus the original cost.

/A2

Divides by the cost, so the result reads "gain per dollar invested."

Format as %

0.3 displays as 30% once the cell has percentage formatting.

When to use it

Use it to compare marketing campaigns, justify a software purchase, evaluate equipment upgrades, or rank projects competing for the same budget.

Common mistakes

• ✕Dividing by revenue instead of cost.

  ✓That computes profit margin, not ROI. ROI's denominator is always what you invested: =(B2-A2)/A2, with cost in A2.

• ✕Using gross return without subtracting the cost.

  ✓=B2/A2 gives the return multiple (1.3×), not ROI. Subtract the cost first — otherwise everything looks 100 points better than it is.

• ✕Comparing ROIs over different timespans.

  ✓30% in one quarter beats 30% over three years. Annualize with CAGR, or compare only investments of similar duration.