How to Calculate Profits When Investing in the Stock Market

by C. Taylor

When investing in the stock market, it's important to analyze your investments and discern which are profitable and which are not. Calculating your profits tells you exactly how much you made in the stock investment, and from that information, you can calculate your overall return. Determining profits is a fairly straight forward calculation.

1. Multiply the number of shares you purchased by the cost per share. For example, assume you purchased 100 shares of a stock at $92 per share. The total cost would be $9,200.

2. Add any commissions that you were charged. There will often be a flat-rate commission assessed when you purchase a stock, and again when you sell it. In the example, if you were charged $25 for each of these trades, your total cost would be $9,250.

3. Multiply the number of shares by the price at which you sold the stock. So if you sold the stock for $98, then the total sales price would be $9,800.

4. Add any dividends received from the stock. If the stock paid annual dividends of $3 per share, and you held the stock for a full year, you would receive $300 in dividends. This brings your total amount received from the stock to $10,100.

5. Subtract the total cost from the total amount received to calculate your profit. In the example, $10,100 minus $9,250 gives you a profit of $850.

6. Divide the profit by the total cost to derive your overall profit yield. In the example, $850 divided by $9,250 gives you a profit yield of 0.092, or 9.2 percent.