This calculator helps investors and business owners quickly assess how effectively a company is generating profits from its equity capital. The tool provides both the calculation and context to understand the results.
Return on Equity (ROE) Calculator
Enter Financial Data
ROE Results
Return on Equity:
Description of Return on Equity Calculator
The Return on Equity (ROE) calculator measures a company's profitability by revealing how much profit a company generates with the money shareholders have invested. It's expressed as a percentage and is particularly useful for comparing the profitability of companies in the same industry.
ROE is one of the most important financial ratios for investors as it shows how effectively management is using equity financing to grow the business.
Instructions for Using the Calculator
- Enter Net Income: Input the company's net income (after all expenses and taxes)
- Enter Shareholders' Equity: Input the total shareholders' equity (assets minus liabilities)
- Click Calculate: The calculator will automatically compute the ROE percentage
- Review Interpretation: See what your ROE result indicates about the company's performance
Note: For best results, use annual figures for both net income and shareholders' equity.
Understanding ROE Results
- Above 15%: Generally considered excellent (varies by industry)
- 10-15%: Good performance
- 5-10%: Average performance
- Below 5%: May indicate poor profitability or inefficient use of equity
Important: ROE should be compared to industry averages and company historical performance for meaningful analysis.
Key Considerations
- Higher ROE generally indicates more efficient use of equity capital
- ROE can be artificially inflated by high debt levels (use with Debt-to-Equity ratio)
- Compare ROE to the company's cost of equity
- Look for consistent ROE over time rather than a single high reading
- Different industries have different typical ROE ranges
Key Features of the ROE Calculator:
- Simple Inputs: Just enter net income and shareholders' equity
- Instant Calculation: Automatically computes ROE percentage
- Clear Interpretation: Explains what your ROE result means
- Educational Content: Includes formula, instructions, and key considerations
- Professional Design: Clean, responsive layout with 1000px fixed width
- Industry Benchmarks: Shows typical ROE ranges for comparison
