# How return per annum is calculated?

If there are a number of purchases and sale in a year, you can use the IRR or XIRR formula in Excel sheet to calculate the annual returns

Can you explain, with an example, how return per annum is calculated when there are more than one purchase and sale during the financial year? Also, is financial year considered as the annum in this case?
- D S Shahapurkar

You can use the IRR or XIRR formula in Excel to calculate the annual returns. The IRR formula is used when the investments are made at regular intervals. If investments are not made at regular intervals, you have to XIRR formula to calculate the returns.

Here is an example:

 Transaction Date of transaction Transaction type Amount(₹) HDFC Equity-G 24/05/2011 Buy -8000 Canara Robeco Equity Div. Reg-G 27/07/2011 Buy -8000 Canara Robeco Equity Div. Reg-G 28/07/2011 Buy -5000 HDFC Equity-G 14/09/2011 Buy -2000 ITC 04/08/2015 Buy -6760.81 HDFC Equity-G 07/08/2015 Sell 18484.52 ICICI Pru Value Discovery Direct-G 10/08/2015 Buy -5000 Canara Robeco Equity Div. Reg-G 24/09/2015 Sell 21481.31 ITC 29/09/2015 Sell 6300.42

Since the investments are not made at regular intervals, we used the XIRR formula excel to obtain the rate of returns= 10.16%.

The formula gives an annualized return over the period defined by the dates. An XIRR return of 13.42% in the above example means that, at the current rate of return (since May 24,2011), you'd make 13.42% over the entire 365-day in a year.