Return on Common Equity Calculator

Calculate the Return on Common Equity (ROCE), a measure of financial performance that indicates how effectively a company uses equity to generate profit.

Input Parameters

Calculation Results

Calculation Formula

ROCE = (Net Income - Preferred Dividends) / Average Common Equity

Where:
Net Income: Total earnings available to common shareholders.
Preferred Dividends: Dividends paid to preferred shareholders.
Average Common Equity: Average shareholders' equity during the period.

Result

Return on Common Equity (ROCE): 0.00%

Return on Common Equity Calculator Calculator Usage Guide

Learn how to use the Return on Common Equity Calculator calculator and its working principles

How to Use the Calculator

  1. Enter the Net Income for the period.
  2. Enter the Preferred Dividends for the period.
  3. Enter the Average Common Equity for the period.
  4. Click the "Calculate" button to compute the Return on Common Equity.
  5. The result will be displayed as a percentage.

Understanding Return on Common Equity (ROCE)

Return on Common Equity (ROCE) is a financial ratio that measures the profitability of a company in relation to the equity invested by its common shareholders. It indicates how effectively a company is using its equity to generate profit. A higher ROCE suggests better utilization of equity and higher profitability for common shareholders.

Example

For example, if a company has a net income of $100,000, preferred dividends of $10,000, and an average common equity of $500,000, the ROCE would be calculated as follows:

ROCE = ($100,000 - $10,000) / $500,000 = $90,000 / $500,000 = 0.18 or 18%