Return on Investment (ROI) Calculator

Published on July 9, 2025

Every dollar you spend in your company has attached to it the hope of generating a return. But how do you know your investment is really paying off? Our Return on Investment (ROI Calculator is design to help you quantify the efficacy of you business investments.

Calculate ROI by simply entering your total investment costs (CAD) and the net profit from those investments into the fields below. This will give you a clear and data-driven answer to the question "was this investment worth it?," which helps you make better informed financial decisions. If you keep track of all your investments in this way you ensure that you are spending your money correctly and driving your business toward success.

What is Return on Investment (ROI)?

Return on Investment (ROI) is a business performance metric that evaluated the efficiency or profitability of an investment. It is expressed as a percentage and essentially answers the question "how much money did I make for each dollar I've spent?"

Why is calculating ROI important?

Calculating ROI is a vital tool for any business and one of its most important performance indicators. It helps in:

Decision-making: calculating projected ROI before making a purchase, for example, can help you decided if the investment is worth it. After the fact, it helps you know if your decision was successful.
Resource allocation: if you have limited capital (or, in general, if you want to run a tight financial management), you want to make sure you invest your money where the return is higher. If you're accustomed to calculating ROI for your investments, you can be familiar with the kinds of investment that will generate this return and therefore know where to put your money.
Accountability: helps you hold yourself and your team accountable for the outcomes of projects and initiatives.
Attracting investment: if you're seeking funding or investment, demonstrating a clear understanding of ROI and a history of positive returns can be crucial for impressing potential investors.

How to calculate Return on Investment (ROI)?

The basic formula for Return on Investment is simple:

ROI = (Net Profit/Cost of Investment) × 100

Let's break down each component, as used in our calculator:

Net Profit: net profit is the total profit that your investment directly generates after deducting the direct costs incurred to generate any particular revenue (but before deducting the initial investment cost itself)
Example: your net profit from the investment would be $10,000 if a new marketing campaign brought in $15,000 in sales and the cost of goods sold (COGS) for those new sales was $5,000. You would enter this amount in the "Net Profit (CAD)" field.
Investment Cost: This is the total amount of money you initially put into the investment. Remember to include all direct and indirect costs associated with making the investment.
Example: For a new machine, this would be its purchase price, shipping, installation, and any initial training costs. For a marketing campaign, it would be the cost of ads, design fees, and agency commissions. This is the figure you'd enter into the "Investment Cost (CAD)" field.

QuickBooks: Helping scale your business with the right financial tools

Accurately tracking your expenses and gains can be complex, especially if you're managing multiple projects at once.

QuickBooks Online simplifies this process by giving you a clear, real-time view of your business finances. By accurately categorizing your income and expenses, you can easily pull the data you need to calculate ROI for any initiative. Whether it's tracking project-specific costs or evaluating the revenue generated by a new product or service line, QuickBooks Online helps you organize your financial data, making ROI calculations straightforward and reliable. This means you can spend less time crunching numbers and more time making strategic decisions that grow your bottom line.

Learn more about QuickBooks

Frequently asked questions

What is considered a "good" ROI for a Canadian small business investment?

Since it genuinely depends on your industry, the particular investment type, and your risk tolerance, there is no one "good" ROI that applies to all situations. For example, the target ROI for a short-term marketing campaign may differ from that of a long-term investment in new equipment. Many small businesses in Canada strive for a ROI that is noticeably higher than that of low-risk options like GICs. You're generally on the right track if your ROI is continuously positive and greater than your cost of capital, or the price of starting a business. Examining industry benchmarks is always helpful to determine how your return on investment stacks up against other companies in your industry.

Does ROI consider the time period of investment?

The time period over which the return is generated is not specifically taken into account by the basic ROI formula, which is what our calculator uses. Although the basic formula would yield the same result, a 50% return on investment over six months is far superior to the same 50% ROI over five years. Some financial metrics, such as Annualized ROI, Net Present Value (NPV), or Internal Rate of Return (IRR), may be taken into consideration for a more thorough assessment of long-term investments or when comparing projects with varying durations. However, the standard ROI is a very helpful and simple metric for quick, project-specific profitability assessments.

What are some common mistakes when calculating ROI?

Small businesses frequently run into a few common pitfalls when calculating ROI, which can result in inaccurate results:

Not including all costs: indirect or "hidden" costs, such as installation fees, training costs, or continuing maintenance, are simple to overlook. Make sure to account for all investment-related expenses, not just the original purchase price.
Overestimating net profit and benefits: regarding the income or savings the investment will produce, be realistic. Don't blame a single new investment for unrelated sales increases.
Ignoring risk: the degree of risk involved in an investment cannot be determined by ROI alone. The risk associated with a high ROI must be taken into account in addition to the percentage.
Not weighing the alternatives: even though an investment has a positive return on investment (ROI), was it the best use of your money? The opportunity cost of what you could have done with your money should always be taken into account.

Using robust accounting software can help you accurately track all relevant income and expenses, making your ROI calculations more precise and reliable.

Disclaimer

Money movement services are provided by Intuit Canada Payments Inc.

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