Return on Equity (ROE)
Net income as a percentage of shareholder equity
FORMULA
ROE % = (Net Income / Shareholder Equity) × 100
Alternate Calculations
DuPont Analysis
Net Margin × Asset Turnover × Equity MultiplierWhat is Return on Equity?
Return on Equity (ROE) measures how effectively a company uses shareholder capital to generate profits. It shows the return earned for every dollar of equity invested. ROE is a key metric for investors and is crucial for evaluating management's ability to create shareholder value.
Chart
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325,000netIncome · Q4Return on Equity
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Sample Data
| quarter | netIncome | equity | roe |
|---|---|---|---|
| Q1 | 250,000 | 1,000,000 | 25 |
| Q2 | 275,000 | 1,050,000 | 26 |
| Q3 | 300,000 | 1,100,000 | 27 |
| Q4 | 325,000 | 1,150,000 | 28 |
Required Data Columns
Net IncomeShareholder Equity