Return on investment (ROI) is one of the most common ways in which investment analysts calculate return. Its popularity is primarily due to its ease of use; that is, the analyst only needs to know the original price and the ending price of the asset. The formula works for any asset, such as stocks, real estate and commodities, and works regardless of the time period in question. For this reason, it is the perfect way to calculate quarterly returns.
Things You'll Need
- Calculator or spreadsheet
Identify the value for at least two different quarters. Let's say you own a stock with Q1 earnings per share of $2 and Q2 earnings per share of $3.
Calculate quarterly earnings/losses. This is the change in asset value. If the price falls in value, ROI will be negative (loss); however, if it increases, the return will be positive (gain). Subtract Q1 earnings from Q2 earnings for the difference. For instance, Q2 Earnings ($3) - Q1 Earnings ($2) = $1.
Calculate the quarterly return. Divide quarterly earnings/losses (Q2 - Q1) by the first quarter (Q1). For instance, $1 / $2 = .5 or 50 percent.
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