Return on Equity Calculator
Measure return on shareholders' equity from net income and total equity.
What this calculator does
The Return on Equity Calculator estimates your result instantly from the values you enter, using standard investing & wealth formulas. Measure return on shareholders' equity from net income and total equity. Calculations run in your browser, so nothing you type is sent to a server, and the output is an estimate for planning rather than financial advice.
Result
About Return on Equity Calculator
The Return on Equity Calculator measures how much profit a company generates on the money shareholders have invested. It divides net income by shareholders' equity and expresses the result as a percentage.
Return on equity, or ROE, is a core profitability gauge for equity investors because it shows the return earned on their capital rather than on the whole asset base. A consistently high ROE signals a business that compounds shareholder value efficiently, though very high figures can also reflect heavy leverage. The calculator applies the ratio directly to the two figures you enter.
Enter the net income and the shareholders' equity, press Calculate, and read the return on equity.
Formula & Mathematical Calculation
Return on Equity (%) = ( Net Income ÷ Shareholders' Equity ) × 100
Calculation Example
A company with $50,000 of net income and $250,000 of shareholders' equity has a return on equity of ($50,000 ÷ $250,000) × 100 = 20%.
Key Benefits
- Measures profit generated on shareholders' invested capital.
- Expresses returns to equity holders as a clean percentage.
- Complements return on assets by focusing on equity rather than total assets.
- Requires equity above zero, avoiding a divide-by-zero result.
How to Use this Calculator
-
Enter the net income
Type the company's net income in the Net Income field, for example 50000. -
Enter the shareholders' equity
Type shareholders' equity from the balance sheet in the Shareholders' Equity field, for example 250000. -
Press Calculate
The tool divides net income by shareholders' equity and multiplies by 100 to return the ROE. -
Compare with ROA
Read ROE alongside return on assets to see how much of the return is driven by leverage.
Assumptions & Limitations
What the calculation assumes
- Every value you enter is treated as an exact, known amount.
- Rates and contributions are assumed to stay constant for the whole period unless the form asks for them separately.
- Results use standard financial formulas and ignore fees, penalties and promotional terms that are not entered above.
- Inflation, tax changes and market volatility are not modelled unless a field for them is provided.
- Amounts are unit-agnostic: results are returned in the same currency you enter.
What it does not cover
- Return on Equity Calculator produces estimates for education and planning, not a quote, offer or professional advice.
- Real-world outcomes differ when fees, taxes, rounding rules or provider-specific terms apply.
- Local regulations and tax rules vary by country and change over time; verify current rules for your jurisdiction.
- Figures are only as accurate as the inputs you supply — check them before acting on the result.
- For decisions with lasting financial impact, confirm the numbers with a qualified professional.
Frequently Asked Questions
Free to use, no account needed. Calculations run in your browser, so nothing you type is sent to a server. Results are estimates — how we build and check our calculators.
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