Return on Equity Calculator
ROE is used to find equity returns and indicates the efficiency of a company. If you want to find the same, you can use our return on equity calculator.
ROE or return on equity shows the ratio of profit the corporation or business firm earned from its equity. In other words, ROE can also be described as the capability of a company to earn profit from shareholders' investments. That is why it is also known as RONW (return on net worth). A company should get an ROE as significant as feasible. However, from an Economist's point of view, a 10-15% ROE must be maintained by a company.
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Formula of Return on Equity Calculator
If you want to estimate the ROE of a company quickly, you can use our return on equity calculator. Or If you want to find it manually, then you must need the values of two variables on which ROE depends:
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Equity/Assets
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Net profit
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After knowing the above variables, you can use the formula listed below.
ROE = (net profit / equity) * 100%
Note:
To calculate the rate of return, you can use our Rate Of Return Calculator.
Example
For a more precise and explicit understanding to know what ROE is? let us have an example below.
Assume a company ABC has generated a net profit of $34,500 this month. The total equity that the company holds is $456,000; now calculate the return on equity from the above-given data.
Given data
Net profit = $34,500
Equity = $456,000
To Find
Return on equity = ?
Solution
We will find the ROE using the formula listed above.
ROE = (net profit / equity) * 100%
Putting values in the formula:
ROE = 34,500 / 456,000 * 100%
The return on equity an ABC company gets is 7.57%.
How to use the Return on Equity Calculator?
The steps to use the return on equity calculator are as follows:
Step 1: Enter the value of net profit in the first required input.
Step 2: Enter the value of equity in the second required input.
Step 3: The calculator will automatically display an answer on the screen.
Calculator use
To find the equity return, you can use our return on equity calculator. Just enter the expected values, and the ROE will be displayed on the screen.
