Return on Equity Calculator
Expert Guide: Return on Equity
Introduction & Importance
Return on Equity (ROE) is a key profitability ratio that measures a company’s ability to generate profits from its shareholder investments…
How to Use This Calculator
- Enter the company’s net income for the period.
- Enter the company’s shareholder equity for the period.
- Click ‘Calculate’.
Formula & Methodology
ROE is calculated as:
ROE = Net Income / Shareholder Equity
Real-World Examples
Let’s calculate ROE for three companies…
Data & Statistics
| Company | Net Income (in $) | Shareholder Equity (in $) | ROE |
|---|---|---|---|
| Apple | 94,698 | 114,177 | 0.83 |
| Microsoft | 44,281 | 136,255 | 0.33 |
Expert Tips
- Compare ROE with industry averages to benchmark performance.
- Track ROE over time to identify trends and potential issues.
Interactive FAQ
What is a good ROE?
A good ROE varies by industry, but generally, a ROE above 15% is considered good.
How does ROE differ from Return on Assets (ROA)?
ROE focuses on shareholder investments, while ROA considers all investments, including debt.