ROE Calculator
Calculate Return on Equity to measure company profitability and efficiency
Calculate Return on Equity (ROE)
Company's total net profit after all expenses and taxes
Total value of shareholders' ownership in the company
ROE Results
Formula used: ROE = (Net Profit ÷ Shareholders' Equity) × 100
Calculation: ($0.00 ÷ $0.00) × 100 = 0.00%
Interpretation: Poor performance, inefficient use of shareholders' equity.
Investment Analysis
Example Calculation
Company Example
Net Profit: $34,500
Shareholders' Equity: $456,000
Calculation Steps
1. ROE Formula = (Net Profit ÷ Shareholders' Equity) × 100
2. Substitute Values = ($34,500 ÷ $456,000) × 100
3. Calculate = 0.0757 × 100 = 7.57%
4. Interpretation = Moderate ROE, room for improvement
ROE Benchmarks
Excellent
Outstanding performance
Top-tier companies
Strong
Very good efficiency
Above market average
Good
Acceptable performance
Market average
Poor
Below average
Needs improvement
Analysis Tips
Higher ROE indicates better profitability and efficiency
Compare ROE with industry averages for context
Look for consistent ROE trends over multiple years
Consider debt levels - high leverage can inflate ROE
Understanding Return on Equity (ROE)
What is ROE?
Return on Equity (ROE) is a key financial ratio that measures a company's profitability relative to shareholders' equity. It shows how effectively management is using shareholders' investments to generate profits. ROE is also known as "return on net worth" (RONW).
Why is ROE Important?
- •Measures management efficiency in generating profits
- •Helps compare companies within the same industry
- •Essential for investment decision-making
- •Indicates company's growth potential
ROE Formula
ROE = (Net Profit ÷ Shareholders' Equity) × 100%
- Net Profit: Company's total earnings after expenses and taxes
- Shareholders' Equity: Total value of owners' stake in the company
- Result: Percentage return generated per dollar of equity
Note: ROE above 15% is generally considered strong, while 10-15% is good.
ROE vs Other Ratios
ROE vs ROA
ROE measures returns on equity, while ROA (Return on Assets) measures returns on total assets. ROE can be higher than ROA when companies use debt leverage.
ROE vs ROCE
ROCE (Return on Capital Employed) considers both equity and debt, providing a broader view of capital efficiency compared to ROE which focuses only on equity.