Schedule mock interviews on the Meeting Board, join the latest community discussions in our Consulting Q&A and find like-minded Interview Partners to connect and practice with!

Anonymous A

on Jan 30, 2025

Global

Could someone give a good explanation of ROI>100% using the ROI=NET PROFIT/ COST OF INVESTMENT?

1.6k

Be the first to answer!

Nobody has responded to this question yet.

Top answer

Maria

Coach

edited on Jan 30, 2025

Ex-McKinsey Engagement Manager in NYC | Part of the McKinsey Private Equity Practice

Hello!

ROI>100% happens when your net profit is higher than the initial investment.

Let's say you bought 10 apples for $100 (or $10/apple). This $100 is your 'cost of investment'. Let's then say that you went and sold these apples in a place where they were very highly valued. You managed to get $100/apple, for a total sales value of $1,000. Let's assume that, after you cover transportation costs, renting a space to sell them, etc., you have $200 left (your net profit). Your ROI is 200% ($200/$100). 200% ROI means you made back 100% of your initial investment of $100, plus another 100%.

This is an exaggerated example, but hopefully it helps highlight the concept of ROI>100%.

Best,

Maria

Hagen

Coach

on Feb 02, 2025

#1 recommended coach | >95% success rate | 9+ years consulting, interviewing and coaching experience

Hi there,

I would be happy to share my thoughts on your question:

If an ROI of 100% means that the gross profit on the investment is twice the costs of the investment, an ROI of >100% means that it is more than twice the costs.

If you would like a more detailed discussion on your specific situation, please don't hesitate to contact me directly.

Best,

Hagen

Alessa

Coach

on Jan 30, 2025

Hey!

If ROI is 100%, it means the net profit equals the initial investment, meaning you've fully recovered the cost and made an equal amount in profit.

If ROI is greater than 100%, it means the net profit exceeds the investment cost.

Alessa

Thabang

Coach

on Mar 13, 2025

#1 Rated McKinsey Coach | Ex-McKinsey | Top MBB Coach | Special Offer: Buy 1 Session Get 1 Free (Limited time!)

Hey there,

ROI = [Net Profit / Cost of Investment]

So it ROI = 100%, it means:

Net Profit = Cost of Investment. Meaning you fully recover the exact amount of investment cost in profits

ROI > 100% means you recover more than the value of your investment costs

All the best