Return on Equity Calculator

Calculate your company's financial performance by determining how effectively it uses shareholders' equity to generate profit

Input Parameters

Calculation Results

Calculation Formula

ROE = Net Income / Average Shareholder Equity

Where:
Net Income is the company's total earnings available to shareholders
Average Shareholder Equity is the average book value of shareholders' equity during the period

%

Enter the calculation inputs to see interpretation

Return on Equity Calculator Calculator Usage Guide

Learn how to use the Return on Equity Calculator and understand its financial implications

What is Return on Equity (ROE)?

Return on Equity (ROE) is a financial ratio that measures a company's profitability by revealing how much profit a company generates with the money shareholders have invested. It indicates how effectively management is using equity to generate profit.

How to Use This Calculator

  1. Enter your company's Net Income for the desired period (typically annually)
  2. Enter your company's Average Shareholder Equity for the same period
  3. Click the Calculate button to see your ROE percentage
  4. Review the interpretation and benchmark information provided

Understanding the Results

The calculator will display your ROE as a percentage. A higher ROE indicates more efficient use of equity to generate profits, which is generally favorable for shareholders.

Important Considerations

  • Compare your ROE to industry averages and historical performance for meaningful analysis
  • High ROE could indicate high financial leverage, which may increase risk
  • Consider using DuPont analysis for a more detailed ROE breakdown (Net Profit Margin × Asset Turnover × Financial Leverage)