ROE Calculator
Calculate ROE step by step: Return on equity = net income ÷ average shareholders' equity × 100.
In short
Formula: Return on equity = net income ÷ average shareholders' equity × 100.
What this calculator does
Calculate ROE step by step: Return on equity = net income ÷ average shareholders' equity × 100. Worked example, questions and limitations included.
Use it to turn Currency (symbol only, never converted), Net income for the period, Shareholders' equity at start of period, Shareholders' equity at end of period into a checked result you can compare, copy, or rerun with different assumptions.
The page shows the formula, a numeric worked example, and the assumptions that affect this corporate finance calculation.
Inputs and what they mean
- Currency (symbol only, never converted)
- — choice value.
- Net income for the period
- — number value.
- Shareholders' equity at start of period
- — number value.
- Shareholders' equity at end of period
- — number value.
How to use it
- Enter each value in the unit shown next to the box (use the unit converter first if your numbers are in other units).
- Check the breakdown to see every intermediate step.
- Read the limitations before relying on the result.
Formula
Profitability ratio as defined in OpenStax Principles of Accounting Vol. 1.
Average = (start + end) ÷ 2.
Use a full year of income, or annualise a shorter period yourself.
Return on equity = net income ÷ average shareholders' equity × 100.
Inputs used: Currency (symbol only, never converted), Net income for the period, Shareholders' equity at start of period, Shareholders' equity at end of period.
Worked example
Net income $90,000
- Average equity = $600,000.
- 90,000 ÷ 600,000 = 15%.
Reading the result
The headline figure is the main answer. Any breakdown underneath shows the parts that make it up, so you can check the working and see what changes when you adjust an input.
Limitations and assumptions
- Two-point average only.
- Accounting values, not market values.
- Results are educational estimates built only from the figures you enter. They are not personalised investment, tax, legal or accounting advice. Rates, growth and discount assumptions are always yours to choose.
- The result depends on the values you enter for this roe calculator; it does not supply missing rates, rules, prices, dates, or assumptions for you.
Common questions
What is a good value?
It depends on the industry, business model and point in the cycle. We do not supply benchmarks; compare against your own history or published peers.
Why can ROE look high with lots of debt?
Debt reduces equity, so the same income divides into a smaller base. Check the debt ratio alongside it.
Is this investment advice?
No. It is a calculation of the figures you enter, not a recommendation to invest or not.
How do I use the ROE Calculator?
Enter the required values for Currency (symbol only, never converted), Net income for the period, Shareholders' equity at start of period, Shareholders' equity at end of period. The calculator applies the formula on this page and shows the main result with any supporting breakdown so you can check the arithmetic.
What formula does the ROE Calculator use?
Return on equity = net income ÷ average shareholders' equity × 100. The visible formula section above lists the calculation path and the edge cases the page handles, so the result can be checked without relying on the form alone.
Can the ROE Calculator be used for exact decisions?
Use it as a calculation aid, not as a substitute for checking the underlying rule, contract, policy, or professional advice that applies to your situation. When a result depends on local rules, personal details, prices, or dates, enter those values yourself and confirm them before acting.
Related tools
Calculate ROIC step by step: ROIC = NOPAT ÷ invested capital, where NOPAT = EBIT × (1 − tax rate).
Calculate ROA step by step: Return on assets = net income ÷ average total assets × 100.
Calculate NPV step by step: NPV = −initial investment + Σ CFₜ ÷ (1 + r)ᵗ for t = 1…n.
Calculate IRR step by step: IRR is the rate r at which −initial + Σ CFₜ ÷ (1 + r)ᵗ = 0.
Calculate Payback Period step by step: Payback = years before full recovery + unrecovered amount ÷ cash flow in the recovery year.
Calculate Discounted Payback step by step: Discount each CFₜ by (1 + r)ᵗ, then find when the cumulative discounted flow covers the investment.