Fundamentals
ROE Calculator
Calculate return on equity using net income and average shareholder equity.
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ROE Calculator formula
Return on equity compares net income with average shareholder equity. Average equity is normally preferable when the balance changes materially during the period.
How to interpret the result
Higher ROE may reflect strong profitability, but it can also be amplified by leverage, buybacks or a small equity base.
Worked example
Net income of one million on average equity of five million produces ROE of 20%.
How to use this calculator
- Enter values from the same transaction or scenario.
- Confirm that quantities, dates, rates and currency match the labels.
- Review the result and change one assumption at a time when comparing scenarios.
Common mistakes
- Using ending equity when average equity is needed.
- Comparing companies with different leverage without context.
- Ignoring negative or unusually small equity.
Limitations
ROE does not separately show operating performance, financing risk, cash generation or the effect of exceptional items.
Authoritative references
This calculator is for general education and estimation only. It is not financial, tax, accounting, or investment advice.
Questions to check before relying on the result
What does this calculator include?
Calculate return on equity using net income and average shareholder equity.
Which assumptions should I verify?
Check every entered amount, rate, date and charge against the transaction, official source or provider document relevant to you.
What can make the actual outcome different?
ROE does not separately show operating performance, financing risk, cash generation or the effect of exceptional items.
Does the selected currency convert my values?
No. Currency selection changes formatting only; it does not fetch or apply an exchange rate.