Profit generated on shareholders' equity. The ROE Calculator takes net income for the year, average shareholders' equity and returns return on equity plus profit per 100 of equity. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Financial ratios are only useful in comparison: against last year, against a competitor, or against the benchmark for your industry. Take the figures from the same set of accounts, note whether they are yearly or monthly, and read each ratio alongside the others in its family. Use the worked example below to check the maths against your own figures.
How the ROE Calculator works
The return owners earn on the capital they have in the business. High debt inflates ROE, so read it with the debt-to-equity ratio.
Worked example
With the example values (net income for the year of $150,000, average shareholders' equity of $800,000), the return on equity is 18.75%; profit per 100 of equity $18.75. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is return on equity calculated?
ROE = net income ÷ average shareholders' equity.
Which figures do I need?
Net income for the year, average shareholders' equity. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
What is a good value for this ratio?
Benchmarks differ by industry, size and business model, so compare with companies like yours and with your own history. A ratio moving in the wrong direction for several periods matters more than any single number.
