Return on Equity (ROE) Calculator: Measure Financial Performance Easily

Enter net income and average shareholder equity, press “Calculate,” and get ROE in seconds. A 2022 survey found the median S&P 500 ROE at 17.6 % (FactSet, 2023). The higher the percentage, the more profit every dollar of equity generates.

Return on Equity (ROE) Calculator

Enter the company's net income for the period.

Enter the average shareholder equity for the period.

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How to use the tool

  • Net Income – type your period profit after tax. Example inputs: 1 200 000 or 60 000.
  • Average Shareholder Equity – add the mean of opening and closing equity. Example inputs: 4 800 000 or 250 000.
  • Click Calculate ROE; the percentage appears instantly.

Formula

$$ \text{ROE} = rac{\text{Net Income}}{\text{Average Shareholder Equity}} \times 100\% $$

Checked examples

  • A: 1 200 000 ÷ 4 800 000 = 0.25 → 25 %.
  • B: 60 000 ÷ 250 000 = 0.24 → 24 %.

Quick-Facts

  • Standard definition matches GAAP guidance (FASB ASC 205).
  • Analysts label 15–20 % ROE “strong” for mature firms (Morningstar, 2023).
  • Median S&P 500 ROE hit 17.6 % in 2022 (FactSet, 2023).
  • ROE above 25 % can indicate leverage risk (Harvard Business Review, 2019).

FAQ

What is ROE?

ROE shows how efficiently your company turns equity into profit (Investopedia, URL).

How do I find average equity?

Add beginning and ending shareholder equity, then divide by two; GAAP endorses this method (FASB ASC 205).

Is a higher ROE always better?

Not necessarily; extreme figures can mask high debt levels that elevate risk (Harvard Business Review, 2019).

Can ROE be negative?

Yes—losses or negative equity yield negative ROE, signaling distress (SEC Filings).

How often should I update ROE?

Quarterly updates align with standard reporting cycles (SEC Form 10-Q).

Does debt affect ROE?

Debt can inflate ROE by shrinking equity while income stays constant (Damodaran, 2023).

How does ROE differ from ROA?

ROA divides income by total assets, while ROE uses equity only (Investopedia, URL).

What is a competitive ROE in tech?

Large U.S. tech firms averaged 28 % ROE in 2023 (Damodaran, 2023).

Important Disclaimer

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