Return On Investment Calculator

The ROI, also known as Return On Investment, -Calculator helps you to calculate if your earnings are enough to reco
consider if these investments can be earned back by the new product.

Tips for use

You can use the ROI calculator yourself but it is useful to get help from someone who has deeper financial knowledg
department (if you have one).

You can use the ROI calculator if you make an investment for your first product or service. With the ROI calculator y
investment with the sale of this product or service.

Do you already have existing products or services and invest in an addition to your company (for example a new line
your other products/services in the Calculator.

How to use
Follow the steps to make an ROI Calculation.

The investment
Start with your initial investment. Estimate how much the new product or service will cost to develop, produce and
related to the new product or service:
-       Development
-       Buying needed machines or machine parts,
-       Costs for buildings or adjustments to buildings,
-       Costs of knowledge,
-       Other things that you will need to be able to create your product.

The investment does not include the costs for materials or personnel needed for creating a product. So only include
maintenance costs.

Taxes
A part of your income needs to be paid to the government or state as a corporate tax, also known as income tax. Th
revenue minus the costs. Enter the right tax percentage for your country or region. To get a good estimate of your r
into account. Write your estimation in the Calculator.

Products sold
The chance that you will earn back your investment within less than a year is slim. Therefore, a forecast is made ove
years you want to calculate your return. If you choose a longer periode, keep in mind that this bears more risk since
are wrong. Estimate the number of products that you will sell in each year. You can choose to estimate for one up to
Keep in mind that a strong growth in sales can also lead to new costs or additional investments. For example, if you

Price
What is the price that you will ask for each product? Enter the price of your product on the sheet. Think about whet
price during the years. If you think that your price will change within a year then take the average price.

Costs
To get a realistic estimate of your return on investment, you also need to take into account costs. There are two typ
-       Variable costs meaning those costs that only exist when a product is being made. Think of materials, productio
per product for each year.

-       Fixed costs Think of loans, insurance, rent, gas, electricity, water or phones. Fixed costs are costs that occur ind

Return on investment and payback period

Once you have entered all the necessary information, the Excel sheet gives you the results. The Excel also shows you
estimated payback period.

The first result is the return on investment. If it says that there is a “negative return on investment” it means that yo
When the return of investment shows a percentage it means that at the end of the period you have earned back yo
example, if you made a € 1,000 investment and the return on investment shows 75%, you have earned back the € 1
€750 in addition. In total you have earned € 1,750.

The second result shows you the payback period. If it says that “the investment is not earned back”, it means that yo
the period to cover the initial investments. When the payback period shows a number it means that within that num

Since the calculations are based on estimations, there is no way in saying if this will be the actual return and paybac
whether it is a profitable idea or not. It can also show you that you need to adjust your price or increase your sales e
return on investment analysis name

RETURN ON INVESTMENT Cumulative cash flow Earnings after tax

1
0.9
0.8
PAYBACK PERIOD
0.7
0.6
0.5
0.4
0.3
INITIAL INVESTMENT
0.2
TAX
0.1

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 0

Products sold YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Price
Revenue € - € - € - € - € - Revenue Total costs
$1.00
Variable cost per product $0.90
Total variable cost € - € - € - € - € - $0.80
Fixed costs $0.70
Total costs € - € - € - € - € - $0.60
$0.50
Earnings before tax € - € - € - € - € - $0.40
Tax € - € - € - € - € -
$0.30
Earnings after tax € - € - € - € - € -
$0.20
$0.10
Initial investment € -
$-
CUMULATIVE CASH FLOW € - € - € - € - € -
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

date
return on investment analysis name Freitag

RETURN ON INVESTMENT Cumulative cash flow Earnings after tax

25000
122%
20000

PAYBACK PERIOD 15000

10000
3.3 year
5000
0
-5000 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
INITIAL INVESTMENT € 15,000.00 -10000
TAX 42%
-15000

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 -20000

Products sold €500.00 €600.00 €720.00 €864.00 €1,037.00
Price €90.00 €90.00 €90.00 €90.00 €90.00
Revenue €45,000.00 €54,000.00 €64,800.00 €77,760.00 €93,330.00 Revenue Total costs
€100000.00000
Variable cost per product €45.00 €45.00 €45.00 €45.00 €45.00€90000.00000
Total variable cost €22,500.00 €27,000.00 €32,400.00 €38,880.00 €46,665.00€80000.00000
Fixed costs €20,000.00 €20,000.00 €20,000.00 €25,000.00 €25,000.00€70000.00000
Total costs €42,500.00 €47,000.00 €52,400.00 €63,880.00 €71,665.00€60000.00000
€50000.00000
Earnings before tax €2,500.00 €7,000.00 €12,400.00 €13,880.00 €21,665.00€40000.00000
Tax €1,050.00 €2,940.00 €5,208.00 €5,829.60 €9,099.30
€30000.00000
Earnings after tax €1,450.00 €4,060.00 €7,192.00 €8,050.40 €12,565.70
€20000.00000
€10000.00000
Initial investment -€15,000.00
€.00000
CUMULATIVE CASH FLOW -€13,550.00 -€9,490.00 -€2,298.00 €5,752.40 €18,318.10
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

date