When to use this calculator
Calculate the ratio of entered equity earnings to average equity. Uses positive average equity and does not remove leverage effects.
Explore the profitability & liquidity calculators for other questions in this topic. For a related calculation, use the Straight Line Depreciation Calculator: Spread an asset’s depreciable cost evenly over an entered useful life.
PUTTING IT INTO PRACTICE
Return on Equity: a worked example
The values below are an illustrative example, not a recommendation. Replace them with measurements or assumptions that match your question.
| Input | Example value |
|---|---|
| Net income attributable to equity | 15,000 |
| Average equity | 100,000 |
| Result | 15 % |
- Check the input labels and enter the example values above.
- Apply the relationship: ROE (%) = attributable net income/average equity × 100.
- The result is 15 %, rounded for display.
How to interpret your result
Uses positive average equity and does not remove leverage effects.
Gross, operating and net profit include different sets of costs. Balance-sheet ratios describe a date rather than a cash-flow forecast. Compare like accounting periods and definitions before drawing conclusions.
Frequently asked questions
Can a healthy current ratio guarantee cash is available?
No. Some current assets may be slow to collect or sell, so payment timing and asset quality also matter.
When is the return on equity calculator useful?
Calculate the ratio of entered equity earnings to average equity. Uses positive average equity and does not remove leverage effects.
How do I use the return on equity calculator?
Enter net income attributable to equity, average equity. The result updates automatically. Use the units shown beside each input; the example values illustrate the method.
Which formula does this calculator use?
ROE (%) = attributable net income/average equity × 100.
What should I check before using the result?
Uses positive average equity and does not remove leverage effects.
How are results rounded?
Scalar numbers display up to six decimal places, with scientific notation for very large or small values. Text, fraction, date and schedule outputs use the format described on the tool. Intermediate calculations use JavaScript floating-point arithmetic. Keep sensible precision for your measurements.
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