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.
This article was originally published on October 16, 2015.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
