Calculate manufacturing ROI, payback period, and annualized return from profit increase, total investment, net cash inflow per period, and timeframe. Select the task to show its required inputs.

Use incremental profit after operating costs. Payback assumes equal net cash inflows. Annualization assumes profit is the total net investment gain, including recovery of the initial capital; it does not model interim cash flows.

Related Calculators

Manufacturing ROI Formula

The following formula and example outline the steps and information needed to calculate the Manufacturing ROI.

MROI = IP / TI × 100

Formula source: Economic Impact Analysis Of Proposed Effluent Limitations and Standards For The Inorganic Chemicals Industry—Phase II (U.S. EPA, 2000)

Variables:

  • MROI is the Manufacturing ROI (%)
  • IP is the total incremental net profit after operating costs, over the stated measurement period ($) 
  • TI is the total investment into the manufacturing ($) 

How to Calculate Manufacturing ROI?

The following steps outline how to calculate the Manufacturing ROI.

  1. First, determine the total increase in profit generated from manufacturing ($). 
  2. Next, determine the total investment into the manufacturing ($). 
  3. Next, gather the formula from above: MROI = IP / TI * 100.
  4. Finally, calculate the Manufacturing ROI.
  5. After inserting the variables and calculating the result, check your answer with the calculator above.

Example Problem : 

Use the following variables as an example problem to test your knowledge.

total increase in profit generated from manufacturing ($) = 50,000

total investment into the manufacturing ($) = 25,000

MROI = IP / TI * 100 = 50,000 / 25,000 × 100 = 200%. Simple payback uses equal net cash inflows rather than accounting profit. Annualized ROI assumes a total investment gain with capital recovery and no interim distributions.