Frequently Asked Questions
Return on Investment (ROI) measures how much profit you earn relative to the cost of the investment. Formula: ROI = (Net Profit / Cost) × 100. A 20% ROI means you earned $0.20 for every $1 invested. ROI does not account for the time the money was invested.
Annualized ROI (also called CAGR — Compound Annual Growth Rate) converts total return into a per-year figure so you can compare investments held for different periods. Formula: (1 + total_ROI)^(1/years) − 1. A 45% total return over 3 years is roughly 13.2% annualized.
The break-even point is the number of units sold (or revenue earned) at which total costs equal total revenue — neither profit nor loss. Formula: Break-Even Units = Fixed Costs / (Price − Variable Cost per Unit). Any sales beyond this point generate profit.